Endeavour Group Ltd (ASX: EDV) shares are taking a hit on Monday after the company released a fresh trading update.
At the time of writing, the Endeavour share price is down a sizeable 7.75% to $3.155.
That extends a tough run for the stock, which is now down around 24% over the past 12 months.
Here's what the company reported.
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Growth slows across retail and hotels
According to the release, Endeavour reported a mixed set of numbers across its retail and hotels divisions.
For the second half to date, retail sales are up 2.9%, while hotels have grown 3.7% over a similar period.
Retail sales came in at around $2.398 billion, with hotels contributing $531 million.
It appears recent trading has been slower than earlier in the half, with the pace cooling off.
Retail growth eased to 0.7%, down from 2.9% in the prior 13-week period, with management pointing to a tougher consumer backdrop.
The company said customers are still spending, but demand remains softer outside of key events like Easter.
Hotels have held up better, with stronger trading across bars, gaming, and accommodation, though growth also slid back through March.
Costs are creeping higher
Alongside the softer numbers, costs are moving higher.
Endeavour flagged higher fuel and freight expenses tied to supply chain pressures, which are expected to lift costs by $6 million to $8 million in FY26.
The added costs are likely to show up in margins, particularly across the retail business.
The group is already working with suppliers and adjusting operations to offset some of the impact, but it still leaves another headwind.
A bigger push on cost-cutting
Management is stepping up efforts to reduce costs across the business.
The company is targeting $100 million in savings by FY27 as part of a broader transformation plan.
That includes changes across store operations, procurement, and support functions.
There is also a near-term impact on working capital, with inventory levels expected to rise by up to $400 million to support availability.
What I'm watching
There is not much here that makes me want to rush in.
The retail environment feels weak right now, and that is the part that usually needs to carry more weight.
At the same time, costs are starting to rise, which does not leave much room if growth slows.
I am more interested in seeing whether spending actually improves outside of the usual seasonal bumps.
I would want to see retail demand pick up again before taking a closer look.
