Endeavour Group Ltd will open four Dan Murphy's superstores as it takes a back-to-back basics approach to business amid accusations of poor management and a broken relationship with major shareholder Bruce Mathieson.
The billionaire publican failed to force board change in October as shareholders voted down the election of former Woolworths and Dick Smith Electronics executive Bill Wavish as an Endeavour director.
Mathieson and Wavish are at loggerheads over Endeavour’s poor management and that Dan Murphy’s stores were moving too far away from its superstore roots and into smaller, boutique stores.
Endeavour is set to brief investors on its business strategy today, with a likely emphasis on its hotels division.
Steve Donohue, the company’s chief executive, shared with The Australian Financial Review that Dan Murphy’s experienced robust sales during the Black Friday and Cyber Week period, as customers opted to make earlier purchases they would typically reserve for the Christmas holiday.
“It tells us that customers are hunting value,” Donohue said. He also mentioned his focus remained undeterred by the ongoing dispute between Mathieson and the board. Bruce Mathieson jnr, Bruce’s son, is a member of the Endeavour board, and the Mathieson family holds a 15% ownership stake.
“Customers are our hardest markers,” Donohue told the AFR.
Chairman on notice
Meanwhile, Ross Blair-Holt, the chief executive of Mathieson’s investment group, conveyed to the AFR that Peter Hearl, the chairman of Endeavour, should be prepared for potential action.
Blair-Holt indicated that if Hearl did not resign by the end of February, the Mathieson Group would seek an extraordinary general meeting to remove him, proposing alternative directors to replace the chairman.
“He thinks he is right, and we are wrong,” Blair-Holt said. “So, we are saying, ‘if you do not make a call on your future, we’re going to go to an EGM’. We will put up some alternative directors and try to railroad the chairman out.”
Endeavour’s stock closed at $5.10 on Tuesday, a 1.5¢ increase. Although the shares have climbed 1.7% over the past month, they have fallen 28% over the past year.
Endeavour, which separated from Woolworths in 2021 and listed on the ASX, manages 271 Dan Murphy’s stores, 1,435 BWS liquor outlets and 354 hotels. The company plans to expand by opening eight to 12 new Dan Murphy’s locations next year, focusing on large sites in urban growth areas.
“We look for sites on the left-hand side of the road, for driving home,” Donohue explained.
Recent openings include Dan Murphy’s stores in Spotswood, Melbourne’s inner west, Epsom in Bendigo and Rosebud on the Mornington Peninsula. A new store is also set to open in Woolooware, Sydney, in January. Donohue noted these were full-size stores, which typically took about two years to reach their full potential.
“It takes two Christmases for a Dan’s to reach maturity,” he said.
UBS analyst Shaun Cousins recently advised clients to purchase Endeavour shares, setting a 12-month price target of $6 per share. Cousins argued that concerns about regulatory risks impacting the company’s 12,000-plus gaming machines in its hotels have been exaggerated.