Endeavour Group reported 3Q25 sales down 1.7%. The Retail division shrank further, while Hotels had a good quarter. The good news for the company and shareholders is the decline in retail sales should now be over. We forecast Retail comp growth of 2.1% for 4Q25e and 3.0% for FY26e. Hotels should see stronger growth, but investors should factor in an earnings dip associated with cashless gaming in Victoria from the end of 2025.

The ACCC’s interim report into Australian supermarkets has not produced any alarming concerns for Coles and Woolworths yet. However, it is too early to draw conclusions either way. The interim report is a very preliminary summary of the issues the ACCC will explore.  The ACCC is yet to process much of its data and there will be further submissions and interrogation over the next two months. We expect the risk to Coles and Woolworths is largely around their ability to expand gross margins to offset cost pressures. Beyond that, we expect the ACCC to conclude that the supermarkets do hold market power but are still largely competitive.

Endeavour’s Hotel segment is in greater focus given recent comments from various state governments about changing regulations on poker machines. We estimate gaming accounts for 24% of group EBIT for Endeavour. Given state governments generate over $6 billion in revenue from gaming machines, we see a shift of the profit pool to government in the form of higher taxes as the key risk to Endeavour. The perception of risk about poker machines will ebb and flow depending on news headlines.