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Billionaire Bruce Mathieson snr has launched his pitch to hundreds of thousands of mum and dad investors in liquor and gaming giant Endeavour Group, arguing they must elect Bill Wavish to the company’s board to reverse the value destruction seen at the company.
The businessman has written to Endeavour’s shareholders, more than 400,000 investors, arguing the group’s liquor businesses Dan Murphy’s and BWS are losing ground to competitors such as Coles Liquor, that the group’s costs are out of control and that its balance sheet discipline is weak.
Bruce Mathieson has hit out at the performance of Endeavour’s liquor brands Dan Murphy’s and BWS, arguing Coles Liquor has eroded the company’s market share. Credit: Louie Douvis
The correspondence marks the start of a proxy war over whether former Woolworths executive Wavish, who is backed by Mathieson, should join the company’s board in a bid to overhaul its strategy.
The letter, which highlights that Endeavour’s current board owns a 0.2 per cent stake in the company, argues current management has presided over “material value destruction” and a decline in operating performance that has gone unchecked.
Mathieson argues the group’s retail business has lost ground, highlighting that Endeavour’s retail sales have reduced by 4.3 per cent since its demerger from Woolworths in 2021, while Coles Liquor has increased its sales by 0.8 per cent on a 12-month rolling basis.
Bruce Mathieson (above) is backing Bill Wavish to join the board at Endeavour Group.Credit: Arsineh Houspian
“Endeavour is insulating this poor retail performance with a value-destructive store rollout campaign. Store efficiency has plummeted with revenue per store declining from $6.2 million to $5.8 million in the same period, and like-for-like growth of negative 2.9 per cent in financial year 2023,” he says.
The letter also says the group’s cost base is out of control and that its working capital management is “highly destructive to cashflow”.
Mathieson points to Wavish’s experience in retail and hospitality, highlighting his role in a $1.3 billion savings program at Woolworths during the four years to 2003.
“I place a wealth of confidence in Bill’s ability to help drive an operational and financial reset of
Endeavour, based on his unparalleled experience as chief financial officer during one of the golden
eras of Woolworths’ journey,” he says.
Endeavour’s performance has been under a sustained attack from Mathieson, who is the group’s largest shareholder with a stake of 15.1 per cent, since he first publicly backed Wavish as a board candidate last week.
Tensions between the company and its major shareholder boiled over in the days that followed, and now the stage is set for a dramatic annual general meeting on October 31.
A series of heated letters have been traded between Mathieson and Endeavour chairman Peter Hearl over the past week, in which Mathieson has outlined his concerns about the direction of the business and taken issue with Endeavour’s initial assertion that Wavish would be unable to stand for election at the AGM if he did not clear regulatory clearances ahead of the meeting. Endeavour now says it will allow a vote on his election even if regulatory approvals are not complete by October 31.
Endeavour argued on Wednesday that Mathieson had misrepresented details of the group’s performance after Hearl responded to Mathieson’s concerns with a letter that included details of Endeavour’s performance.
“Mr Mathieson has selected the two-year post demerger period, (Q4 F20, Q1-3 F21) vs F23), which begins during the COVID-19 pandemic, when retail was open yet most hospitality venues were shut, to give a misleading impression of performance,” an Endeavour spokesperson said.
Endeavour shares were 0.6 per cent stronger to $5.24 in early afternoon trading.
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