Dan Murphy’s parent Endeavour Group has reported positive retail sales growth for the fiscal first half, which management attributed to the company’s investment in lower shelf prices. However, price cutting dented the bottom line.

According to the group’s latest trading update, retail sales for the 27 weeks ended January 4 improved 0.3 per cent year-on-year to $5.5 billion, with a 1.4 per cent decline in the first quarter replaced by a 1.8 per cent increase in the second quarter.

Dan Murphyʼs and BWS sales for the half grew 0.7 per cent to $5.4 billion. Highlights included a record sales month in December, driven by Dan Murphyʼs biggest ever trading weeks leading into both Christmas and New Yearʼs Eve.

The group said it continued to sharpen its focus on best-in-market pricing, alongside value-focused promotions underpinned by Dan Murphyʼs lowest liquor price guarantee.

“The pricing and promotional decisions we have made in our Retail business have generated positive sales results, delivering on our aim to better align the customer propositions for each of our brands to re-ignite top-line growth,” said Endeavour Group CEO Jayne Hrdlicka.

“We are very pleased with the speed of customer reaction to our shelf price and targeted promotional activity, highlighting the strength in both retail brands.”

The group’s total sales, which include the hotel segment, rose 1 per cent to $6.6 billion for the half. 

Group EBIT is expected to be between $555 million and $566 million, down from $595 million in the year-ago period. Management noted that investment in pricing and promotions would result in a lower profit margin for the period.

The group also expects to incur a net expense of approximately $45 million related to significant items in the first half. Most of this comes from one-off cessation costs associated with the closure of the Melbourne Liquor Distribution Centre.

Further details on trading performance will be provided in the half-year results, scheduled for March 4.