It's been a rough start to the trading week for many ASX 200 stocks this Monday. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has dropped by 0.45% to around 8,257 points. But that looks positively rosy compared to what's happening with one particular ASX 200 stock.
That ASX 200 stock is bottleshop owner Endeavour Group Ltd (ASX: EDV). Endeavour shares are having a nightmare of a day; no way around it. The Dan Murphy's and BWS-owner closed up shop at $4.73 last week. But this morning, those same shares opened at just $4.66 before dropping as low as $4.45.
At present, the company has recovered a little but is still trading at $4.48 a share, down a painful 5.18% for the day so far.
Not only is $4.45 a new 52-week low for Endeavour, but it is also the lowest share price this ASX 200 stock has ever traded at. That's perhaps not as dramatic as it might first appear, given Endeavour has only been listed on the ASX since mid-2021. But even so, it's a horrid day for this company and its investors.
So what's going so wrong for Endeavour today that has prompted this new record low for the company?
Image source: Getty Images
Why has this ASX 200 stock just slumped to a new record low?
Well, it appears a trading update that Endeavour released this morning before market open is responsible for the significant investor pessimism we are currently seeing.
This update revealed Endeavour's performance over the company's quarter running from 1 July to 6 October 2024.
The ASX 200 stock revealed that sales for this period totalled $3.105 billion, a 0.5% increase from the $3.091 billion reported for the same period last year.
The company's retail sales were completely flat for the period at $2.538 billion. Saying that, the company also revealed that Dan Murphy's and BWS sales were down 1.1% on a comparable stores basis.
Endeavour also reported a 2.5% rise in revenues for its hotels business, which ticked up from $553 million to $567 million. That figure improves even further to 2.9% growth on a comparable hotels basis.
However, Endeavour also warned investors that its operating margins are coming under pressure. The company enjoyed an operating margin of 8% on its earnings over the first half of FY2024 but is warning investors to expect this to drop to between 7% and 7.5% for the first half of FY2025.
Additionally, Endeavour also flagged that its supply chain costs across the first half of FY2025 "will be higher than the pcp [prior corresponding period], primarily due to distribution centre wage costs".
Endeavour CEO warns investors of hard times ahead
Coupled with the company noting that "achieving retail sales growth in the second quarter is expected to be challenging", it looks as though Endeavour's next earnings report might not be too delightful.
Endeavour CEO Steve Donohue said as much when he cautioned investors that broader uncertainty lies ahead for the company. Here's some of what he had to say in today's update:
Endeavour Group delivered a stable trading performance in the first quarter as cost of living pressures continued to impact consumer spending in our categories…
After a positive start to the year, Retail sales momentum slowed in September. During the quarter, promotional intensity lifted across the sector as customers became increasingly value conscious. In challenging market conditions, our Retail business has continued to execute well – growing our market share…
In the near term, softer sales and a lower margin sales mix, resulting from both a higher percentage of sales on promotion and consumer downtrading, are expected to impact Retail profitability. Continued inflationary pressure on operating costs is also impacting margins.
So, given these results, it's perhaps no surprise that investors aren't brimming with confidence today. Let's see how the rest of the week treats this ASX 200 stock.
