Endeavour, which also owns the bottle shop chain BWS and hundreds of pubs, reported a bottom-line interim net profit of $247 million, which was down about $50 million on its previous first-half result.
"The group's underlying earnings were impacted by our decision to invest in lower shelf prices for our customers and also to compete more vigorously against the elevated promotional environment currently at play in retail," chief executive Jayne Hrdlicka said on Wednesday.
Customers could expect the competitive pricing to continue, the former Virgin Australia boss said.
"To be clear, the intention is Dan Murphy's will not be beaten on price by anyone at any point for any reason," Ms Hrdlicka said.
Group sales grew 0.9 per cent to $6.7 billion, indicating the strategy was working, she said.
"Over the last few years, the strategy really was to focus on margins, and it's clear this caused us to lose focus on value for our customers at a time when they needed it most," Ms Hrdlicka said.
"This is now being addressed."
The group was restarting "top-line growth" in its retail bottle shop business, which comprises more than 1700 stores.
Sales for Dan Murphy's and BWS rose 0.2 per cent to $5.5 billion, while the pubs division, which includes more than 350 hotels, boosted revenue by 4.4 per cent to about $1.2 billion.
Sales for the latter were driven by an uplift in gaming, better performances at refurbished venues, and a positive trend in food and bar transactions.
Hotels delivered the strongest-ever December sales result, supported by record sales in the week leading up to Christmas, as well as record food, bar, and accommodation sales on New Year's Eve.
Some of the hotels under the Endeavour umbrella include Brisbane's Breakfast Creek Hotel, Young & Jackson in Melbourne, and the Jamison Hotel in Sydney.
Looking ahead, Ms Hrdlicka said the outlook for consumer spending was uncertain.
"Given elevated inflation, war in the Middle East and rising interest rates, the group's scale, value proposition and market-leading brands mean we are well-positioned to compete and win in a market where consumers remain focused on value for money," she said.
Sales for the first seven weeks of the second half of 2025/26 were 1.3 per cent higher for its bottle shops and 4.5 per cent for its hotels.
Endeavour will pay a first-half dividend of 10.8 cents, down from 12.5 cents previously and below market forecasts.
The group also lifted its projected capital expenditure range to between $460 million and $500 million (from a previous $420 million to $470 million), due to increased investment in hotel renewals.
Endeavour's share price fell almost 3.8 per cent in morning trade on Wednesday to $3.83, in a broadly negative day for the consumer staples sector and the wider market.
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