Endeavour share price jumps as sales reach $6.5b

Earnings of the company's hotel business more than doubled last half.

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Key points

  • The Endeavour share price surging this morning, gaining 4.69% to trade at $7.14
  • It comes after the company posted a $364 million post-tax profit for the first half of FY23
  • It also hasn't seen any material softening in key customer metrics amid current economic uncertainties 

The Endeavour Group Ltd (ASX: EDV) share price is charging ahead after the company dropped its earnings for the first half of financial year 2023 this morning.

Shares in the drinks retailer and hotel operator are trading 4.69% higher at $7.14 each right now.

Here are the highlights of the company's 1H 2023 results.

Endeavour share price lifts as hotel earnings double

  • After-tax profit lifted to $364 million – a 17% increase on that of the prior comparable period (pcp)
  • Sales reached $6.5 billion – a 2.5% increase
  • Earnings before interest and tax (EBIT) lifted 15.8% to $644 million
  • Earnings per share (EPS) came in at 20.3 cents – up 16.7%
  • Declared 14.3 cents per share interim dividend – a 14.4% year-on-year improvement
  • Ended the period with a $1.3 billion net debt position

The company's retail operations (which include BWS and Dan Murphy's) EBIT slumped 9.3% last half to $418 million, while sales slipped 3.7% to $5.4 billion as the company cycled previous COVID-19 peaks.

Meanwhile, EBIT at its hotels business surged 111.6% to 256 million and sales rose 55.3% to $1.1 billion. That reflected the recovery of the group's hotels business.

What else happened last half?

It was a big half-year for Endeavour. It expanded its network with 21 new liquor stores and five new hotels. Meanwhile, it renewed 60 retail stores and 34 hotels.

Both BWS and Dan Murphy's saw record sales in the weeks leading up to the festive season, while the number of active My Dan members rose 9% year-on-year to 4.9 million.

The company also launched its MixIn retail media business and acquired the Shingleback Wines brand.

What did management say?

Endeavour managing director and CEO Steve Donohue commented on the results driving the company's share price today:

Our team has delivered strong results group-wide, with a standout December from the first restriction-free festive season in three years.

Pleasingly, our [first half] EBIT result of $644 million was 15.8% higher versus prior period, reflecting both the return of hotels to full operation and our careful management of the deleverage impacts of lower retail sales as we cycle COVID-19 driven peaks.

On a three-year comparative basis, both Hotels and Retail sales are trading well ahead with 4.7% and 4.5% [compound annual growth rates (CAGRs)] respectively.

What's next?

Endeavour's retail sales remained stable over the first five weeks of this half, rising just 0.2% on those of the prior year. Sales at its hotels, however, lifted 31.5% year-on-year.

The company expects to see some volatility ahead but hasn't yet seen any material softening in key customer indicators amid current economic uncertainty.

Finally, the company agreed to acquire winery Cape Mentelle last month.

Endeavour share price snapshot

The Endeavour share price has been outperforming the S&P/ASX 200 Index (ASX: XJO) in recent times

The stock has gained 12% so far this year compared to the index's 7% lift. Meanwhile, the last 12 months have seen Endeavour shares soar 15% while the ASX 200 has risen just 3%.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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