Group revenue has increased at Endeavour Group, while sales for its retail arm continues to decline in a post pandemic environment.

Despite its retail being down from pandemic highs, the retailer said its first half sales represent growth of 14 per cent over the last three years and a compound annual growth rate of 4.5 per cent over this period.

Across the group, revenue reached $6.5 billion for the first half of FY23, a 2.6 per cent increase from the same period last year, it told the ASX.

Group EBIT also increased by 15.8 per cent to $644 million, which was attributed to the “strong recovery” of hotel operations. Sales for hotels recorded $1.1 billion, a 55.3 per cent increase from last year.

“The group result reflects uninterrupted trading across all channels, which included a strong recovery in hotels through the half and the continuation of customers embracing new and innovative products and drinking better,” Endeavour Group CEO and managing director Steve Donohue said during an investor’s call this morning.

While sales were up across the board, Endeavour’s retail arm continued to decline, from its COVID fuelled highs, as seen in its previous results for the first quarter.

The group recorded $5.4 billion of sales during the first half of the financial year, a 3.7 per cent decline.

During the investor’s call, Endeavour Group chief financial officer (CFO) Shane Gannon said this was a result of cycling through COVID-19 impacts, which strongly affected both its hotel and retail segments.

“Our hotels results were negatively impacted, whilst retail had a very strong first half last year as on premise closures and restrictions persisted at this time,” he said.

“Whilst there was a lot of noise in the cycle and COVID impacts, our half one results indicate our group shape is returned to a more typical segment mix.”

Gannon also explained that the retail gross profit margin is stabilising in comparison to previous years.

“Retail had a very strong first half last year with an elevated market due to on premise restrictions,” he said.

“With that context, one of the highlights in the results we share today is the stability of the retail gross profit margin at 23.8 per cent, which is actually slightly ahead of last year by 12 basis points.

“This represents a gross profit margin expansion of approximately 242 basis points since half one of FY20, and is a result of the continuation of positive consumer trends and the benefits from our investments in initiatives such as personalisation, and promotional optimisation.”

CEO Steve Donohue also acknowledged last weeks’ news of a fee increase for brewers to have their beers handled by Dan Murphy’s.

In an email to suppliers, the company said it would introduce a new charge of $1.89 per carton to distribute through its national distribution centre. The Independent Brewers Association has since responded, asking the company to reconsider.

Answering a question about the potential impacts of this on the retail margin, Donohue said that conversations are open with suppliers.

“In the case of that one, a bit over 12 months ago, while COVID was still causing all sorts of problems, we undertook to commit to our suppliers that we wouldn’t pass on the increasing supply chain costs that we’re experiencing and we’ve talked quite a lot about that over the last 18 to 24 months in terms of those impacts,” he said.

“So we undertook to subsidise that amount and this is simply that coming to a conclusion.

“We’re very focused on supporting our suppliers as we did through COVID, and intend to continue to do going forward.”

While the retailer had previously said it was faced with “rising costs across its network”, the current results showed that its margins remained unaffected.

Elsewhere in its update, Endeavour Group announced Kate Beattie to be appointed as CFO from June 2023, with Shane Gannon stepping back from executive roles.