Billionaire pubs baron Bruce Mathieson is backing the appointment of former Woolworths (ASX: WOW) executive Bill Wavish as independent director of Endeavour Group (ASX: EDV) in a bid to halt the share slide of the Australian drinks and pokies giant.
Mathieson, who controls 15 per cent of Endeavour following the demerger of Woolworths’ pubs portfolio into the stand-alone business in 2021, has made no secret of his disappointment with the existing board and with the $5 billion fall in the value of Endeavour Group since August last year.
The group, which owns the Dan Murphy’s and BWS chains, as well as Australia’s largest portfolio of poker machines, has been hammered by weak investor sentiment amid tighter regulations planned for poker machine punters in Victoria.
Wavish, a former executive chair of Myer Group (ASX: MYR) and a former CEO of Woolworths when it was led by Roger Corbett, is making a pitch to shareholders for his appointment as non-executive director ahead of the company’s annual general meeting on 31 October.
He plans to write directly to shareholders on the changes he wants to pursue as a director, including a skillset renewal at board level accompanied by plans to rein in business costs and regain market share for the retail business.
Endeavour Group’s shares have dropped from highs above $8.30 in August last year to a record low of $5.10 last week, despite the company posting a 6.9 per cent increase in net profit to $529 million in FY23.
However, in a statement today, Wavish says that since the demerger from Woolworths, Endeavour’s ‘retail sales are down, competitor sales are up, and Endeavour Retail has surrendered market share while its costs of doing business are up 130 basis points’.
Wavish describes Endeavour’s cost base as ‘bloated’ with operating costs jumping 11.4 percent in FY23. He adds that attempts at cost control are ‘unambitious’ and that they are failing to keep up with inflation.
The retail executive wants to bring new directors on board who will ‘bring focus, fresh ideas and deep retail-operational experience’ to improve shareholder outcomes.
“The Endeavour Group board needs to evolve to include a broader range of expertise and capabilities to reset the company’s strategic direction and importantly, revitalise its core brands,” Wavish says.
“This board must take a leadership position and not be captured by insiders who may be resistant to change.
“After two consecutive years of underperformance, calling for more time is no longer acceptable. As a starting point, an urgent and fulsome review of capex is required to ensure the company is delivering a return on investment for shareholders.
“While I am very optimistic about the future of Endeavour urgent action must be taken to address a period of material mismanagement and gross underperformance.”
Wavish will seek election to the Endeavour board following moves to bolster independent representation. His nomination comes on the heels of an announcement last week that non-executive director Colin Storrie will not seek re-election at the upcoming AGM.
Should he succeed, Wavish will join Bruce Mathieson Jr as an independent director on the board.
“During my tenure at Woolworths, I had the great privilege of overseeing the formation of BWS, the expansion of Dan Murphy’s and the acquisition of ALH and many prominent hotels that are still a core part of Endeavour’s portfolio,” Wavish says.
“I was also a core part of the senior leadership team that implemented a comprehensive cost reduction program, Project Refresh, that delivered $5.3 billion in savings by 2006.
“It is with this deep knowledge, and the support of other shareholders, that I am committed to securing a board seat and working collaboratively on a much-needed turnaround.”
In a statement to the ASX this morning , Endeavour has confirmed that a formal process is in train to appoint two new non-executive directors to the board as part of an 'orderly succession' process.
“The board acknowledges Mr Wavish’s nomination, having commenced engagement with him and extended the invitation to participate in the current board recruitment process under way,” the company says.
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