Steve Donohue will step down as CEO of Endeavour Group

After 30 years in the business, which began with a summer job at a Dan Murphy’s, Steve Donohue will vacate his role.

Endeavour Group’s departing managing director and chief executive Steve Donohue.

Endeavour chief executive Steve Donohue will step down from the company after 30 years at the business, which saw him navigate the demerger from Woolworths, Covid-19 lockdowns and a bruising fight with the company’s largest shareholder.

The sudden announcement of Mr Donohue’s departure from the helm of Endeavour, which owns Dan Murphy’s, BWS, more than 350 pubs and a portfolio of beverage businesses and wineries, comes as the company has struggled to secure sustainable profit growth, with its shares down 19 per cent since it split from Woolworths and down more than 7 per cent in the last 12 months.

Shares in Endeavour fell another 2.5 per cent to $4.99 on Friday as the departure of Mr Donohue was announced in an ASX statement. The next CEO faces challenges including a cautious consumer who is spending less on alcoholic beverages, regulatory risks to its more than 12,000 pokies machines installed across its pubs network, and pledges by the previous CEO to hit 10 per cent-plus annual shareholder returns from 2026.

There is also the question of how a new CEO will deal with Mr Donohue’s strategy of buying up wineries such as Cape Mentelle and Josef Chromy to add to its hefty wine label portfolio, which includes Oakridge, Krondorf and Chapel Hill – a strategy that has drawn scepticism and criticism from investors.

However, Endeavour’s flagship liquor store chain Dan Murphy is in a dominant position against its chief rival Coles, whose liquor stores have struggled for years and are greatly underperforming Dan Murphy’s and BWS in terms of sales and profitability. Mr Donohue has also grown retail sales at its bottleshops from $8.3bn in 2018 to $10.2bn in 2024, while earnings for that arm lifted from $516m to $717m.

While Mr Donohue fleshed out Endeavour’s strategy as a standalone business, and negotiated the sharing of costs and back-end infrastructure with Woolworths, he also was forced to put out fires in his own boardroom. After facing Covid-19 lockdowns which saw the bulk of the company’s more than 350 pubs and hotels shut down, Mr Donohue locked horns with his largest shareholders, the Mathieson family, in a very public and bitter corporate stoush before a truce was finally announced.

The peace treaty included the departure of the Endeavour chairman and Bruce Mathieson Jr stepping down as a director to be eventually replaced with a new director that represents the Mathieson clan – although this new appointment would need the agreement of the rest of the board.

On Friday Mr Mathieson Sr welcomed Mr Donohue’s departure and said he should have “departed a long time ago”.

He said the performance of the company had not been good under his leadership, which was reflected in the share price.

“He should not have been in the job – running pubs is different from running a Dan Murphy’s. My family built that company and there is not one person left. They are all Woolworths people.”

Mr Donohue reflected an increasingly rare feat in modern corporate Australia.

Mr Donohue began his career via a casual summer job in the second Dan Murphy’s store in Alphington, Victoria, in 1994 before quickly rising through the ranks to take on a range of leadership roles across Endeavour Drinks and Woolworths Group and ultimately become CEO.

Donohue’s career with Endeavour started with a casual job at the Alphington Dan Murphy’s.

The Endeavour board is engaging external advisers as part of a comprehensive process to identify a new CEO. Mr Donohue will remain in his position to assist with an orderly transition.

Endeavour chairman Ari Mervis described Mr Donohue as a rare CEO who rose from the shop floor to the top job, leaving a significant legacy. “His passion and drive is known throughout the company as well as the broader industry. Steve has a track record of success through a range of roles, and I wish to pay special tribute to his leadership of the organisation and his passionate commitment to making Endeavour a success.”

Mr Donohue led the amalgamation of joint venture ALH Hotels and Endeavour Drinks to form Endeavour Group in 2018, and oversaw the demerger from Woolworths and an ASX listing in 2021.

“Six years after we created Endeavour Group and with the strategy and culture well established as an independent company, now is the right time for me to pass the baton on to the next leader,” Mr Donohue said in an ASX statement on Friday.

“It has been an immense privilege to lead this company and to have been a part of this business for three decades.

“I take great pride in the achievements of the company during my time as CEO and thank everyone at Woolworths and Endeavour who has supported me over many years.”

E&P analyst Phillip Kimber said the change in CEO was likely to weigh on sentiment towards the company in the short term.

“We also expect the new CEO is likely to be an external appointment. Endeavour have medium-term financial targets in place, however these are from fiscal 2026 onwards (high single digit EPS growth). Consensus expectations sit below these targets.

“Our positive investment view is underpinned by improving momentum in Endeavour’s key retail businesses in Dan Murphy and BWS (now back winning market share), and material opportunity to improve profitability in the hotels business.”

Macquarie said in a note to its clients that despite this change in leadership the business would remain committed to its growth targets. “Endeavour aims to deliver 10 per cent-plus annual shareholder return from fiscal 2026, supported by mid-to- high-single-digit EPS growth and a 70-75 per cent dividend payout ratio.

“In our view, the key to executing this growth strategy will be in the company’s ability to effectively deploy capex into its hotels business, into which it has historically underinvested.”