Endeavour Group, which owns Dan Murphy's and BWS retail liquor outlets and hundreds of pubs across Australia, plans to take $300 million in costs out of the business, including the $100 million already planned for the new financial year.
"We don't have the operating model right," chief executive Jayne Hrdlicka, who joined in January, told an investor strategy day on Wednesday.
"We now have clarity on why the operating model doesn't work and what has to be different, and how we are going to deliver."
Endeavour will now focus on growing its retail revenue "by reinforcing price leadership", which signals potentially cheaper liquor prices, lifting its pubs' performances, as it takes down the $300 million in costs.
In the hotels, or pubs' arm it will increase investment through renewals, refurbishments and repositionings to meet the needs of "energetic socialisers", gaming fans and others looking for relaxed and family-friendly environments, according to a slide pack presented to investors.
It will also exit the majority of its existing winery and vineyard portfolio, which includes wine brands Chapel Hill, Oakridge and Josef Chromy, held under the Pinnacle Drinks business.
The idea is to use the remaining Pinnacle business to support the bottleshops and venues by focusing on high-performing brands that generate the best returns.
However, Endeavour will also cut its dividend payout ratio to between 50-75 per cent of group underlying net profit, to ensure it has the funds it needs to support its planned turnaround.
This means potentially lower dividends for investors in the foreseeable future.
Endeavour shares had fallen by about 2.5 per cent to $3.01 just before noon, after hitting an all-time low of $2.95 soon after the stock market opened. Its all-time high was $8.40 reached in August, 2022.
The group's bottom-line earnings have been trending lower over the past three years, along with its share price and quarterly sales.
Ms Hrdlicka's aim is to arrest that and set the company up for stronger profit growth in the years ahead.
"Both in retail and in the hotels business, we have a significant opportunity to get the fundamentals right," she said.
Earlier this month, Endeavour warned that the conflict in the Middle East, sparked when the US attacked Iran in late February, was threatening supply chains and pushing up fuel and freight costs.
At the same time, it warned cost of living pressures were weighing on sales of liquor, which is a discretionary item unlike food, and food and bar sales in its pubs.
Endeavour will report its 2025/26 results in August.
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