The Endeavour Group Ltd (ASX: EDV) share price is in the red after the company released a trading update for the quarter just been.
The drinks and hotels business saw its sales slip 2.1% over the 13 weeks between 3 January and 3 April, on those of the same period of last year, led by its retail division.
Though, the S&P/ASX 200 Index (ASX: XJO) company notes the dip was partly due to the timing of the Easter holidays, which fell in the third quarter of financial year 2021. Its performance was also impacted by COVID-19 and extreme weather events.
In fact, major flood events in NSW and Queensland cost the company approximately $9 million during the period.
At the time of writing, the Endeavour share price is $7.77, 1.27% lower than its previous close.
Let’s take a closer look at today’s update from the Woolworths Group Ltd (ASX: WOW) spin off.
Endeavour share price down as sales slip
The Endeavour share price is down after the company announced its group sales for the March quarter slumped to $2,728 million.
Most of that fall is attributed to the company’s retail business – the home of Dan Murphy’s and BWS. Its sales fell 3% to $2,323 million last quarter.
Though, adjusting for the Easter holidays, which fell in the fourth quarter of financial year 2022, the segment’s sales slipped 0.7%.
Also adjusting for Easter, the segment’s online sales rose 16.8% to $222 million last quarter. That saw it surpassing $1 billion of annual online sales.
The ASX 200 company believes the drop in retail sales was partly born from relaxing COVID-19 restrictions, as Australians returned to pubs and hotels.
Meanwhile, Endeavour’s hotels segment brought in $405 million of sales – a 3.8% improvement. Or, a 2.5% improvement if adjusting for Easter.
The improvement was also driven by easing COVID-19 restrictions in Victoria and NSW, where improving sales offset a decline in Western Australia. Restrictions tightened in the western state during the period.
Though, the spread of COVID-19 caused customer hesitancy and impacted staff availability early in the quarter.
Endeavour managing director and CEO, Steve Donohue said the company’s “sustained strength” was “encouraging”, particularly during a challenging quarter.
These results are once again delivered within the context of an uncertain operating environment with extreme weather events, ongoing supply chain disruptions, and growing inflationary pressures creating new challenges.
Flood events take their toll
Damages to the company’s stores and bottom line caused by major flooding in parts of NSW and Queensland might also be hampering the Endeavour share price this morning.
Dan Murphy’s Lismore store was submerged in floodwater in early March. 10 BWS stores were also impacted by the flood event.
Additionally, Endeavour’s Breakfast Creek Hotel – located in Brisbane – and its Westower Tavern – in Ballina – were affected.
Endeavour expects the event dinted its earnings before interest and tax (EBIT) by $9 million last quarter.
That figure includes the direct costs of the floods, such as clean-up costs and asset write offs. It also includes the estimated profits lost due to some stores and hotels being unable to open.
Endeavour is processing an insurance claim for the event. It hasn’t recognised an insurance recovery yet.
As of the end of the quarter, 5 stores and a hotel remained fully or partially closed.
Endeavour share price snapshot
This year so far has been good for the Endeavour share price.
Right now, it’s 14% higher year to date.
It has also gained 29% since it split from Woolworths in June 2021.
The post ‘Another period of volatility’: What’s going on with the Endeavour share price today? appeared first on The Motley Fool Australia.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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