Endeavour Group Ltd (ASX: EDV) shares are falling on Wednesday morning.
At the time of writing, the ASX 200 share is down 4% to a 52-week low of $2.95.
This follows the release of an investor day update from the Dan Murphy's and BWS owner.
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Why is the ASX 200 share falling today?
Investors have responded negatively to Endeavour's new strategy update, which aims to drive revenue growth, improve efficiency, and support long-term shareholder returns.
Following a strategic review led by CEO and managing director Jayne Hrdlicka, the ASX 200 share has identified three priority areas for growth.
These are resetting its multi-brand retail strategy, unlocking the growth potential in its hotels business, and simplifying operations to reduce costs.
Retail reset
A key focus of the strategy is restoring stronger momentum in Endeavour's retail business.
This comprises 1,737 retail liquor stores nationally, approximately 9 million active members across its retail programs, and around 180 million retail customer touchpoints over the last 12 months.
The company plans to reinforce Dan Murphy's price leadership and reposition both Dan Murphy's and BWS to better serve different customer groups.
For Dan Murphy's, the focus will be on restoring its position as the destination for value and range, supported by sharper pricing, a more customer-led range, and stronger use of its digital assets.
For BWS, management wants to build on the brand's convenience position, improve the digital experience, localise ranges, and deliver more value through customer engagement platforms.
Hotels investment to increase
The ASX 200 share sees a significant opportunity in its hotels business.
The company owns Australia's largest pub network, with 352 hotels and approximately 1.1 million pub+ registrations.
Management plans to lift investment in the network through light-touch renewals, refurbishments, and whole-of-venue repositionings.
The company is targeting a year-two return on investment of more than 15% from growth capital expenditure in hotels. It also expects to increase the number of hotel renewals to 50 to 60 per year over the next three years.
Cost savings and asset sales
Another major part of the update is its cost reduction target.
Endeavour is aiming for $300 million of cost savings by FY 2029, including approximately $100 million in FY 2027. This will be achieved through operational productivity, process simplification, site cost optimisation, and procurement and supply chain improvements.
The ASX 200 share is also simplifying its asset base.
Its Pinnacle Drinks business has been repositioned to support retail and focus on higher-return brands. As part of this, Endeavour plans to exit the majority of its winery and vineyard portfolio, including Chapel Hill, Oakridge, and Josef Chromy.
Dividends take a hit
The company's plans will impact its dividends in the near term, which could be what is weighing on its shares today.
To maintain funding flexibility and prioritise growth investment, management has changed its targeted dividend payout ratio to between 50% and 75% of underlying net profit after tax.
Commenting on the plans, Hrdlicka said:
We examined the business through a number of lenses and have made the tough choices required to deliver the Group's next phase of growth. With a disciplined focus on customer value, a targeted step-up in Hotel investment, a hard eye to cost and a simplified asset base, we have begun to execute our transformation.
There is significant untapped potential in Australia's best Retail liquor brands and Hotels, and we now have the roadmap in place to ensure that potential is fully realised for our customers and our shareholders.
