Endeavour Group Ltd (ASX: EDV) shares are falling in early trade on Wednesday.
At the time of writing, the ASX 200 stock is down 3% to $3.85.
This follows the release of the drinks giant's half-year results before the market.
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ASX 200 stock tumbles on results day
For the 27 weeks ended 4 January 2026, Endeavour reported group sales of $6.7 billion, representing a 0.9% increase on the prior corresponding period.
However, profitability declined during the period. The company reported a 6.7% decline in underlying net profit after tax to $278 million and a 17.1% decline in statutory net profit after tax to $247 million.
Management notes that its underlying earnings landed at the upper end of the company's guidance range.
Underlying cash realisation remained strong at 165%, supported by improved working capital management.
In light of its profit decline, the Endeavour board has cut its fully franked interim dividend by 13.6% to 10.8 cents per share. This represents a payout ratio of approximately 70% of underlying earnings.
What happened during the half?
Endeavour's retail segment, which includes Dan Murphy's and BWS, generated sales of $5.5 billion, up by 0.2% year on year.
Encouragingly, trading momentum improved during the second quarter. Combined Dan Murphy's and BWS sales increased 2.2% during this period, with December delivering a record month of sales for the group.
Online performance was particularly strong, with digital sales rising 35.1% to $608 million, representing 11.3% of combined Dan Murphy's and BWS sales.
Despite this sales growth, retail profitability declined due to price investment and elevated promotional activity across the liquor market. This saw retail underlying EBIT fall 11.6% to $327 million.
The ASX 200 stock's hotels business performed strongly. Hotel sales increased 4.4% to $1.2 billion, supported by growth in gaming revenue, food and bar transactions, and refurbished venues. Underlying EBIT for the segment rose 5% to $275 million.
Endeavour also continued investing in its hotel network during the half, completing 21 venue renewals and installing over 800 new electronic gaming machines.
Commenting on the half, the ASX 200 stock's managing director and CEO, Jayne Hrdlicka, said:
We are pleased to report that the Group has delivered a first half earnings result that demonstrates the strength in our customer franchise as we restart top line growth in Retail. In a challenging market, our increased focus on value and price leadership has been embraced by our customers and is delivering both sales growth and market share gains.
Our Hotels business continues to improve its performance, supported by positive trends in food and bar transactions and growth in gaming revenue driven by targeted investment in refurbishments and new EGMs.
Outlook
Looking ahead, Endeavour revealed that early second-half trading has been positive.
Sales growth for the first seven weeks of the second half was 1.3% in Retail and 4.5% in Hotels.
However, the company cautioned that consumer spending remains uncertain due to ongoing inflation and higher interest rates.
Hrdlicka commented:
Looking forward, we are excited about the next phase for Endeavour as we complete our strategy work and begin the process of getting early opportunities ready for implementation. We will share this work with the market at our Investor Day when the detail around the plan is more complete. The Group has a unique asset portfolio, a large and loyal customer base and some of Australia's most trusted retail brands.
I am confident that we now have the management team and right strategy to leverage our scale and market leadership, compete to win and unlock value for our shareholders.
