Endeavour boss defends Dan Murphy’s mojo as fiery AGM looms

The boss of drinks giant Endeavour Group has defended the performance of Dan Murphy’s and BWS sales that have undershot market expectations as management executives and board directors steel themselves for a fiery annual meeting on Tuesday where executive pay and leadership will come under the spotlight.

In a call with analysts and investors on Monday morning, Endeavour chief executive Steve Donohue was asked about the company’s plan after notching 1.9 per cent growth in its retail division and 2.8 per cent in its pubs and hotels division for the first quarter of 2024.

Endeavour Group chief executive Steve Donohue has defended Dan Murphy’s sales.Credit:

“Let’s address the elephant in the room … The view out there is that you guys have lost your mojo,” said Bank of America analyst David Errington.

“Dan Murphy’s probably needs to be doing better than [1.9] per cent if you’re going to be able to grow profit in the future … So what can we expect from you in the next three to six months as investors to really believe that you haven’t lost your mojo?”

Investors have been disappointed by Endeavour’s quarterly figures, sending the share price down 2.2 per cent at the end of Monday’s trading session after analysts from UBS and E&P Capital assessed the modest sales numbers as below expectations and “slightly disappointing”.

Donohue said the company would focus on “unlock[ing] the next phase of growth” by “driv[ing] earnings and sales growth, gross margin management and cost control” and “managing our working capital inventory”.

He also pointed to Dan Murphy’s lowest price guarantee as a driver of consumer value perception, with loyalty members accounting for nearly 90 per cent of Dan Murphy’s sales as My Dan app users proactively seek prices that will beat competitors. “You can imagine that is very appealing when people are trying to save money,” said Donohue.

The second quarter, which folds in the Christmas trading period as well as the spring races, is expected to deliver strongly for Endeavour. “As people come into Christmas they’ll be looking to save a maximum amount of money on the big shop they do,” he said.

Tensions over the leadership and strategic direction of Endeavour Group will come to a head on Tuesday at the company’s annual meeting in Sydney, following weeks of attacks from pubs billionaire Bruce Mathieson, who is Endeavour’s largest shareholder, with a 15.1 per cent stake.

Incensed by a 31 per cent decline in the share price over the past 12 months, Mathieson has launched a campaign to help elect retail veteran Bill Wavish to the company’s board. He has also demanded Endeavour chair Peter Hearl step down from his role at the company’s annual meeting.

Wavish’s election is appearing increasingly unlikely after the nation’s most powerful proxy advisers recommended against Wavish’s election, and Woolworths signalled its intention to vote with Endeavour’s board.

However, Endeavour is expected to receive some shareholder pushback against its remuneration report at Tuesday’s meeting, though it is unclear whether there will be enough to constitute the 25 per cent needed for a “first strike” as Mathieson will be abstaining from the vote based on a technicality.

Mathieson said Endeavour’s first quarterly results “vindicated” his criticism of Endeavour and reiterated calls for Hearl to depart the board.

Pubs billionaire Bruce Mathieson wants to see change at Endeavour.Credit: Arsineh Houspian

“Another quarter of revenue not even near to keeping pace with inflation. After nine quarters of continuous loss, they’ve finally beaten Coles Liquor by a decimal point. They should be beating them by a country mile,” Mathieson said in a statement. Coles’ Liquorland last week reported 1.8 per cent growth in its first quarterly sales.

“Hearl’s hobbies in the retail business have failed spectacularly and it’s clear for all to see. Speciality revenue is going backwards and is in absolute freefall,” he said.

“When I said ‘get back to everyday low prices’ I didn’t intend for Hearl to start with the share price.”

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