Which supermarket is winning the retail war?
As Australians stockpile groceries and supplies in the event of being quarantined, which of the two leading supermarkets are winning the war?
Since the start of 2020, Coles returned 5.3% versus returns of 3.7% by rival Woolworths.
Coles also beat Woolworths over the year to 4 March, 2020, with a 12-month return of 40% versus 30% for Woolworths.
The firms were both hit by “toilet paper gate” as customers stockpiled toilet paper last week. Woolworths was reported to have run out, rationing stock per customer, which was a positive for Coles and both firms consulted with Prime Minister Scott Morrison on how to improve availability.
Both of these companies had beaten the ASX 200 which lost 4.6% since the start of the year.
However, they have both also come under fire for an underpayment scandal. Coles admitted underpaying staff at least $20 million over the last six years but this was dwarfed by the $300 million underpayments at Woolworths.
Coles, which was founded in 1914, was held in the top 10 of at least 15 funds such as EQT Flagship, Fidelity Australian Equities and Lazard Select Australian Equity, according FE Analytics.
The firm was previously owned by Wesfarmers from 2007 but listed on the ASX as Coles Group in November, 2018.
In its latest results for the six months ended 5 January, 2020, Coles said revenue increased by 3.3% over the period to $18.8 billion and it expected a $20 million hit to group earnings from the underpayment scandal.
Meanwhile, Woolworths was held in the top 10 of more than 60 funds including AMP Capital Equity, Schroder Australian Equity and Legg Mason Martin Currie Core Equity.
For Woolworths, the company reported $32.4 billion in revenue for the six months to 31 December, 2019, but was hit with one-off costs of $131 million, including $80 million provision for worker remediation after an underpayment scandal.
Share price of Coles and Woolworths from 31 December, 2019 to 4 March, 2020
AUTHOR
Laura Dew
Recommended for you
VanEck is expanding its fixed income range with a new ETF this week to complement its existing subordinated debt strategy which has received $1 billion in inflows this year.
Specialist global equities manager Nanuk has celebrated 10 years of its flagship New World Fund and is actively considering its next possible vehicle.
Australian equities manager Datt Capital has built a retail-friendly version of its small-cap strategy for advisers, previously only available for wholesale investors.
The dominance of passive funds is having a knock-on effect on Australia’s M&A environment by creating a less responsive shareholder base, according to law firm Minter Ellison.
