Endeavour Group Limited

Thank you for standing by and welcome to Endeavour Group's F22 first quarter trading update. All participants are in a listen-only mode. Endeavour CEO Steve Donoghue will provide some opening remarks followed by a question and answer session. Participants will need to press star 1 to ask a question. Only one question per person will be permitted. However, if time permits, participants are welcome to rejoin the question queue. I'd now like to hand the conference over to Mr Steve Donaghy, CEO. Please go ahead.

Thank you.

Good afternoon everyone and welcome to Endeavour Group's first quarter trading update. I'd like to begin by acknowledging the traditional custodians of land on which we're based here today in Surrey Hills, the Gadigal people of the Eora Nation. and pay my respects to elders past, present and future. I'd also like to welcome Shane Gannon, our CFO, who's also with us here today. I'll be providing a short overview of the trading results for the quarter and then Shane and I will take a few questions. The first quarter of our financial year covers the period from the 28th of June through to the 3rd of October. And as you're all aware, there's been significant COVID restrictions in place across this period, most notably lockdowns in New South Wales and Victoria. along with a variety of other trading restrictions across the country. Through the quarter, on average, 40% of our hotels were closed. As a national hotel operator, this has had a significant impact on our business. Sales from our hotels were $282 million in the quarter, which was down 9.9% when compared to the same quarter last year. And you might remember that COVID also impacted on trading in Q1 of last year when Victoria experienced its extended lockdown. To provide some further context on the impact of COVID, our hotel sales were down almost 40% when compared to F20. Despite these immediate challenges, we've continued to look to the future and have continued to invest in hotels. We've accelerated the rollout of our digital order and pay capability, which has actually had great customer take-up when our hotels are actually open, as well as having rolled out a new time and attendance system for our teams. We were pleased to complete the acquisition of the Terry Hills Tavern which we referenced as part of our full year results and which subsequently acquired the Manly Hotel in Queensland. These acquisitions included five accompanying retail stores that have been added to our BWS network in the quarter. So turning to retail, sales of $2.654 billion were recorded in the quarter. This is in line with the very strong sales of Q1 and F21 and up 21.4% on Q1 and F20. Pleasingly, sales were strong in each state, indicating that our sales resilience has not entirely been a consequence of on-premise closures. Our retail team were able to deliver improved customer engagement, even while navigating changing trading patterns. Customer engagement during the quarter, as measured by our BOC NPS scores, was up three points for both BWS and Dan Murchison. Our online sales grew 34.4% when compared to the prior year, and this represents a penetration of 11.5% of retail sales in the quarter. Notably, the on-demand delivery services offered by Dan Murphy's and BWS store heightened demand, particularly from customers seeking more premium products. During the quarter, 10 BWS stores were opened, including the five that I mentioned, and one store was closed, bringing the total BWS store network to 1,401 stores. And reaching that milestone of 1,400 VWF stores was really cause for celebration across the whole Endeavour group. Dan Murphy's store network ended the quarter with 253 stores, following the opening of two new stores, one at Fisherman's Bend in Port Melbourne and the other at Batto Bay in New South Wales. I want to acknowledge the enormous effort from our team during the quarter across all of our businesses. We've continued to support our teams with vaccination leads, We've also had vaccination hubs operating in New South Wales and Victoria, and we've supported team members who were required to isolate during the period. It was really fantastic to welcome patients back to our New South Wales hotels last week, most of which had been closed for 105 days. And we look forward to similar celebrations in Victoria in the coming days as they too emerge from their extended lockdowns. We're also looking forward to operating with our entire network actually open, particularly as we come into summer. and then through to the new year, which I'm sure everyone on the call can look forward to. As we referenced in the Q1 announcement, we anticipate our trade will continue to be impacted by COVID restrictions and additionally, there are some ongoing challenges in both team availability and supply of products, which we'll continue to monitor and respond to. Having said that, with our hotels open and opening and only 66 days until Christmas, there's definitely a renewed sense of excitement and optimism across our business. We're focused on delivering a social and safe experience for all of our customers over this important time for everyone. And I really hope that we can welcome each of you back to enjoy our hotels, our stores, our wines and our wineries over the coming festive period. Appreciate you joining the call today. Thank you for your time. And I'd now like to hand over to questions for both Shane and I. Thank you.