Woolworths vs Coles: which do you prefer?
Hey Aussie, When doing your weekly shop, you've likely noticed that your dollarydoos just aren't stretching as far as they used to.The price of everyday food items has soared in recent weeks with farmers passing on rising production costs to consumers.Due to high inflation and successive interest rate increases by the Australian Federal Reserve, consumers' enthusiasm for retaliatory spending has waned this year, as they have reduced recreational spending as well as spending less on non-essential consumer goods. Since Coles and Woolworths are belong to the essential consumer goods sector, which has been less affected by the rally over the past two months, the essential consumer goods sector has clearly outperformed than others. However, both stocks have declined recently. What has happened?$Coles Group(COL.AU)$ $WOOLWORTHS GROUP LTD(WOW.AU)$ Woolworths posts tepid annual profit, weak start to 2023 $WOOLWORTHS GROUP LTD(WOW.AU)$currently has four major business segments: Australian food retail, Australian food wholesale, New Zealand food and Big W business. It posted a nearly flat annual profit last week.Total sales at Australian Food segment for the first eight weeks of fiscal 2023 were down 0.5% from last year. Sales in its New Zealand Food segment were down 1% during the same period. This was mainly due to supply chain snarls have dented sales of its key Australian Food business at the start of the new fiscal year.Bad weather and floods have blocked roads and wiped out crops, increasing wholesale costs. The cost of doing business, excluding one-off expenses, increased 96 basis points (bps) to 25.1% for Australian Food in the reported period. Coles warns of cost pressures Since its spin-off from Westfarmers,$Coles Group(COL.AU)$ has maintained a relatively simple business structure, with three divisions - supermarkets, liquor, and express. There was a 2.2 percent increase in supermarket revenue, accounting for 87 percent of total revenue, and a 2.5 percent increase in liquor business. The express division, however, saw a five percent decrease in sales as a result of reduced traffic flow caused by theOmicron virus in the first half of the year, as well as flooding in the second half of the year, leading to the closure of 30 gas stations and an increase in oil and fuel prices. However, the company achieved a 4.3% increase in net profit after tax to $1,048 million, exceeding analysts' expectations of $1,006 million. Coles vs Woolworths price war Price wars also affect the share price movements of the two supermarkets in addition to the earnings report. While consumer discretionary is a defensive and anti-cyclical sector, the supermarket and grocery sector is one of the most competitive in Australia. Woolworths & Coles have released price reductions in an attempt to expand market share. Woolworths has announced price drops for over 400 essential items. Coles supermarket has “locked” the price of 1,168 products across its range until early 2023 - and has already begun lowering the price of an additional 500 buys After the two supermarkets are currently engaged in a price war, which is expected to adversely affect the company's gross profit in the coming six months, which will in turn affect its stock price. Finally, we would like to ask Woolworths vs Coles: which do you prefer? 🎁Prizes Feel free to leave your comments in the comment section. All Tigers who comment on the following post will receive 10 Tiger Coins. In addition, you have the chance of winning 100 Tiger Coins. ⏰Activity Duration 31 Aug, 2022-7 Sept, 2022