BWS owner cuts dividend as Aussies avoid booze splurge
Derek Rose |
Australia’s biggest alcohol retailer is looking forward to new leadership and the results of a strategic review after a sub-par year marked by a drop in profit and management turmoil.
Dan Murphy’s and BWS owner Endeavour Group on Monday said it would cut its dividend after making $426 million in net profit after tax in the year to June 29, down 15.8 per cent from 2023/24.
The company blamed subdued sales during cost-of-living pressures, particularly in poorer outer suburban areas, as well as industrial action by Woolworths warehouse workers in late 2024 that cost it an estimated $40 million to $50 million in lost sales.
Beyond the poor financial showing there have been leadership challenges since Steve Donohue announced his retirement in 2024 after 30 years with the company.
Former chairman Ari Mervis had been serving temporarily as executive chairman but quit effective immediately three weeks ago, citing disagreements with the board without giving details.
Former Virgin Australia and a2 Milk boss Jayne Hrdlicka is set to take over as chief executive and managing director on January 1, pending receipt of regulatory approvals.
For now she’s consulting to the board the equivalent of two days a week.
“As a board, we recognise that F25 was a challenging year, marked by movements within both the executive leadership team and the board,” Endeavour Group chairman Duncan Makeig said.
The company is doing a portfolio-wide review of its business after the sub-par year that reportedly could result in a split of its pubs business with its liquor stores.
Endeavour Group said retail sales fell by 1.2 per cent to $10 billion in 2024/25, compared with the year before.
The company’s 1444 BWS and 278 Dan Murphy’s liquor stores recorded solid trading around key reasons to celebrate, including Christmas, New Year and Easter, but outside those periods consumer spending remained subdued.
The trend has continued into the new financial year, with Dan Murphy’s and BWS sales down 1.3 per cent in its first seven weeks, compared with the same period a year ago.
Interim chief executive Kate Beattie told analysts on an earnings call there had not been any big social occasions recently to drive business.
“As we look forward to the remainder of this half, we think there are many opportunities for that momentum to begin to be restored through all of the occasions that we’ve mentioned, to celebrate, to socialise and to come together,” she said.
This will begin shortly with Father’s Day on September 7, when Endeavour is again putting whiskey promotions front and centre.
From there it will be onto the footy finals, spring racing, Black Friday and corporate end-of-year events into the Christmas gifting and holiday season, Ms Beattie said.
Customers with higher discretionary income and younger demographics have been less impacted by the cost-of-living squeeze, with luxury wines – bottles priced at $25 and above – continuing to sell well.
Partially offsetting the drop in retail liquor sales was a stronger performance by Endeavour Group’s portfolio of 354 licensed hotels and clubs, where sales were up 4.1 per cent to $2.1 billion in 2024/25 and have been ahead 4.4 per cent for the first seven weeks of 2025/26.
Endeavour plans to add 600 new poker machines in the first half, after introducing 1000 last financial year.
Endeavour Group said it would pay a final dividend of 6.3 cents per share, fully franked, down from 7.5 cents a year ago.
Endeavour Group shares were down 2.4 per cent to $4.10 in Monday afternoon trading.
AAP
