Liquor retailer and hotel operator Endeavour Group has begun a three-year, $200 million technology-enabled optimisation program, targeting efficiencies across its entire supply chain over the next three years.
The group’s optimisation program will target $200 million in so-called “cost-out” initiatives to ease inflationary pressures and free up funds to allow further investment in line with its strategy.
CEO Steve Donohue announced the program in its 2023 full-year results as part of the company’s new ‘endeavourGo’ program “or Endeavor Group optimisation program” that aims to use “the new capabilities we’ve built in the most efficient way.”
“Looking forward, we’re targeting a further $200 million in annualised run rate savings by the end of FY26,” he said.
“This will increasingly rely on us standing up new core tech platforms, which will help drive that efficiency and cost out.”
He said “being deliberate and disciplined” in relation to cost management “has been a key focus” since separating from previous owner Woolworths in 2021.
“In the two years since the demerger, our optimisation initiatives delivered $90 million in savings – $30 million in FY22 followed by another $60 million in FY23,” he said.
“The types of initiatives already undertaken include the introduction of an activity-based rostering system across our retail network, with a team using AI and other analytics to optimise store rosters.
“We’ve also simplified our in-store and online delivery processes amongst a variety of other initiatives”.
The group has also been working with Woolworths on a plan to transition to standalone technology platforms, shifting off previously shared infrastructure.
The group’s technology transformation work called ‘One Endeavor’, will continue over the next year as it works with Woolworths to transition to standalone technology platforms.
The company anticipates an operating expenditure of $40 million to $50 million, and a capital expenditure of $35 to $55 million, all in FY24, which it hopes will offer future benefits.
Endeavour Group’s chief financial officer Kate Beattie told investors the naming of ‘One Endeavour’ was “very deliberate” as “we know that a technology program in and of itself won’t deliver a transformation for the business.”
“We’re regarding it very much as a holistic transformation program across people, processes and systems and we’re in capturing all of that in the description of it as One Endeavour,” Beattie said.
Donohue added the company understands it has “a very disparate technology platform or platforms that we’re operating on at the moment.”
“Many of them are out of date [or] past [their] useful life so there’s a lot of work that’s going into One Endeavour and the consequent benefits through Endeavour Go.”
Other brand highlights
Dan Murphy’s digital My Dan’s membership program grew to 5.2 million active members with a usage rate of 79 percent, and saw 60 percent of its sales online.
The liquor retailer also continued with its “rollout of electronic shelf labels, which have delivered operating efficiency as well as an improved customer and team experience”.
Donohue said the BWS liquor retailing brand also “had a strong year supported by the broader customer trend back to local and convenient shopping”.
“We continue to add to the network of stores in the year opening 18 net new stores to bring the total number of stores to 1435,” he said.
“This puts us closer to more customers than any other brand, which facilitates both in-store and online shopping with the broadest reach of any express delivery network.”
BWS has been targeting Gen Z and saw 400,000 active users of its app.
In the Pinnacle Drinks division, “sales in the year reached a new high of $1.7 billion”.
The division “invested in the upgrade of a Dorrien winemaking facility in the Barossa to drive further efficiency and productivity savings”.
Endeavour’s hotel’s division, meanwhile, saw “results [that] reflect a robust recovery from the impacts of Covid-19 restrictions and the return to a full service offering across the network”, and recorded $2 billion in sales.
The ALH Hotels brand, meanwhile, began a “proof of concept for a new hotel app platform called Pub Plus”.
“We plan to pilot and progressively roll out in the second half of FY24 with the aim of step-changing both our guest engagement and guest experiences.”
The company achieved total group sales of $11.9 billion, up 2.5 percent from the same time last year.
Net profit after tax came in at $529 million, up 6.9 percent while earnings before interest and taxes (EBIT) totalled $1.023 billion, up 10.7 percent from the prior period.