Metcash reported FY24 EBIT down 1% and, adjusted for acquisitions, it was a similar result in both the first and second-half. The company is actively managing costs to offset weak sales trends and this thematic is likely to be a feature again in FY25e. Metcash’s performance relative to market growth remains impressive and is the primary reason for our positive stance on the stock.

Endeavour Group reported normalised sales growth of 1.0% for 3Q24. The retailer’s challenge is a tough industry backdrop. We expect soft sales trends to continue as the liquor retail industry undergoes a normalisation of volume and pubs experience some trading down behaviour. Even so, sales trends should improve slightly in 4Q24e and FY25e for Endeavour.

We expect signs of slowing sales, which reflect weak volumes and decelerating inflation. For Coles, we forecast 3Q24e Supermarket comp sales growth of 4.3%. We estimate Woolworths Food comps to rise by 1.5% and for Endeavour Retail we forecast comp sales to increase by 0.7%. While the differential in growth rates will be of interest, the bigger concern for the retailers is the continued weakness in volumes. Inflation is set to slow from here and comp sales growth could be even weaker in 4Q24e, which is a challenge for the retailers given cost growth remains far higher.

Endeavour Group reported 1H24 sales up 2.5% and EBIT up 2.6%.  The company had an increase in gross profit margins and some cost savings to help offset higher operating cost growth. Weak sales trends in liquor are likely to persist throughout 2024 in our view as the industry resets volumes back towards more normal levels post the COVID-19 boom. While higher gross margins can be a red flag, Endeavour is holding market share and the cost savings embedded in 1H24 give us confidence in second half earnings.

Endeavour reported group sales growth of 2.1% in 1Q24. The underlying trends were similar for both the Retail and Hotels division and we expect growth to remain near this rate over the remainder of FY24e. In Retail, the company’s revenue growth is catching up to market growth, but industry-wide volumes are in decline. In Hotels, the company is stepping back from acquisitions, focusing more on renewals and redevelopments.

Endeavour Group reported a solid 1Q23 sales result. In Retail, Endeavour’s store only sales fell 3% and we estimate the liquor industry dropped by 2% in the quarter. In Hotels, Endeavour’s weekly run-rate of sales jumped by 8% in 1Q23 compared with 4Q22 and momentum looks good into Christmas.