The Coles Group Ltd (ASX: COL) share price has been a very strong performer over the last six months. During this time the supermarket giant's shares have risen by a massive 24%.
As a comparison, the benchmark S&P/ASX 200 index has recorded a gain of 5% over the same period.
Why is the Coles share price up 24% in 6 months?
The key catalyst to this strong share price gain was the company's investor day event in June. At this event Coles unveiled its refreshed strategy and the market was impressed with what it saw.
Coles' refreshed strategy aims to deliver on its vision of becoming the most trusted retailer in Australia in order to grow long-term shareholder value.
It is based on three pillars: Inspire Customers through best value food and drink solutions to make lives easier; Smarter Selling through efficiency and pace of change, and Win Together with its team members, suppliers and communities.
The Smarter Selling pillar was the one that got investors most excited. It aims to deliver $1 billion in cumulative savings by FY 2023.
Management expects to achieve this through initiatives including the use of technology to automate manual tasks and simplifying above-store roles to remove duplication. This will allow Coles to offset the impact of rising costs from energy and labour.
Another driver of its share price gain was a solid full year result and the declaration of a special dividend last month.
In FY 2019 Coles reported full year group sales revenue growth (excluding Fuel and Hotels) of 3.1% to $35 billion.
This was driven by sales revenue growth across Supermarkets, Liquor and Express, and ultimately led to the company posting a 5.4% increase in profit from ordinary activities after tax to $1,078.2 million.
This allowed the Coles board to declare a final fully franked 35.5 cents per share dividend, which comprised a final dividend of 24 cents per share and a special dividend of 11.5 cents per share.
Is it too late to invest?
Whilst I think its shares are close to being fully valued now, I would still class them as a buy for investors that plan to make a buy and hold investment. I would also say the same for former parent Wesfarmers Ltd (ASX: WES) and would choose them both over rival Woolworths Group Ltd (ASX: WOW) on valuation grounds.
