Endeavour Group Limited (ASX: EDV) has provided an update on the impact of recent industrial action in Victoria, which disrupted its supply chain, particularly in relation to its retail stores.
Industrial Action Overview
The industrial action, which began on 21 November 2024, was in response to ongoing negotiations over enterprise agreements at two of Woolworths Group’s distribution centres in Victoria. Woolworths provides warehouse services to Endeavour Group, and the strike affected the supply of stock to Endeavour’s stores.
The dispute was resolved, and the affected distribution centres re-opened on 8 December 2024. However, the disruption led to significant stock shortages in some of Endeavour’s retail locations, particularly in Victoria, Tasmania, and southern New South Wales.
Impact on Sales and Operations
- Sales Impact: Endeavour estimates that group sales have been adversely impacted by approximately $25 million due to the stock shortages. The impact is expected to persist as stores are replenished.
- Inventory Challenges: The stock-outs occurred at a crucial time for Endeavour, as December trading is significant for the company’s first-half results.
- Contingency Measures: In response, Endeavour implemented several contingency plans to mitigate the impact, including building up store inventories, leveraging alternative distribution networks, and arranging for direct-to-store deliveries from suppliers.
- Ongoing Impact: The full financial impact remains uncertain, as it will depend on how quickly inventory levels are restored across the stores and distribution centres. The loss of sales from stock-outs could further affect Endeavour’s performance, especially given the timing of the disruption.
CEO Comments
Endeavour Group CEO Steve Donohue expressed appreciation for the patience of customers and the support of supplier partners during the disruption. He also acknowledged the efforts of Endeavour’s team members who have been working hard to restore stock levels as quickly as possible.
This disruption was not included in the guidance provided during Endeavour’s first-quarter sales update on 11 November 2024, marking it as a one-off event impacting the company’s financial performance in the short term.
