Endeavour Group chair Ari Mervis says beaten down share price reflects tougher trading conditions

Endeavour chair Ari Mervis has pinned the blame for the liquor and pub giant’s beaten down share price on rising household pressures and still-high inflation.

Mr Mervis told the company’s annual general meeting in Sydney on Wednesday that Endeavour’s share price performance — which hit a record low of $4.34 on Monday — reflected “a number of headwinds” the group was facing.

This included “cost of living pressure on the consumer, which is dampening spending in our categories; ongoing inflation, which is impacting our cost base, particularly our rent and wages expenses; and high interest rates, which increased our financing costs.”

The company is behind the Dan Murphy’s, BWS brands and hotels group ALH. It was a spin-out of Woolworth’s liquor division and listed on the ASX in June 2021.

“Against the backdrop of a . . . retail trading environment, the board and management team are heavily focused on tightly managing our costs and implementing measures to make Endeavour Group a simpler and more efficient end-to-end business,” Mr Mervis told shareholders.

Among those measures was the Endeavour Go cost optimisation program, which he says has delivered $190 million in savings in the past two years.

Endeavour shares have fallen again to close down $4.28 on Wednesday but shareholder David Kingston, from K Capital, said it was 45 per cent down from its peak of $8.32 in August 2022.

“For a major company dealing in stable industries of liquor and hotels, Endeavour’s performance has been concerning,” he told the meeting.

Nearly 26 per cent of votes were cast against the approval of long-term incentive grant to outgoing Endeavour chief executive Steve Donohue.

The company expects to take a profit hit in the first-half as budget-conscious shoppers prefer cheaper options and it is forced to put more products on sale.

In a trading update on Monday, Endeavour said operating earnings margins for its retail arm was expected to hit between 7 per cent and 7.5 per cent in the first half, compared with 8 per cent the prior year.