With the end of April firmly in sight, it's an opportune time to review what's happened with the Coles Group Ltd (ASX: COL) share price over the past month.
Over the past 30 days to yesterday's close, the Coles share price rose 2.31%. In comparison, the S&P/ASX 200 Index (ASX: XJO) rose 4.29% higher in the same period.
Let's take a closer look at what's been impacting the Coles share price this month.
The big news impacting the Coles share price
The new price wars
Earlier this month, Coles slashed the prices of hundreds of products in its supermarkets. The retailer dropped the cost of both generic and branded goods by anywhere from 5% – 35%. With grocers operating on relatively low margins, lowering prices could result in greater pressure on profit.
It was reported that Coles decided to engage in price competition because of its larger store exposure in Victoria (which was the state with the longest COVID lockdowns in the country), and because of inferior online sales compared to Woolworths Group Ltd (ASX: WOW).
Klarna/Flybuys Partnership
Flybuys, a joint venture between Coles and Wesfarmers Ltd (ASX: WES) partnered with Swedish buy now, pay later (BNPL) provider Klarna this month. Klarna is partly owned by the Commonwealth Bank of Australia (ASX: CBA).
Under the deal, Klarna users can trade their Klarna 'vibe' points for 3 Flybuys points each. Vibe points are only accrued after a product bought is fully repaid. Flybuys users who link their Klarna accounts to the loyalty program will also receive a bonus 1500 Flybuys points.
Q3 sales update
On Wednesday, Coles released its Q3 results for FY21. Revenue was down 5.1% on the prior corresponding period (pcp) but up 7.2% on Q3 of FY19. Sales totalled $8.8 billion for the quarter.
Sales were down the pcp due to a massive surge in spending at retailers as the pandemic began and many consumers resorted to panic buying.
The supermarket arm saw a 6.4% decline in comparable sales and a 6.1% decline in total sales on the pcp ($7.7 billion total sales). Liquor and Express, however, both saw growing sales in the quarter. The liquor business reported a 2.6% increase in comparable sales and a 2.1% increase in total sales ($759 million total sales). The Express operations saw sales increase 6.3% in comparable sales and jump 7.1% in total sales ($275 million total sales).
Coles management noted consumer behaviour was normalising post-pandemic. These included Sunday trading becoming the busiest day again and improving sales in CBD stores and stores in major shopping centres.
Coles share price snapshot
The Coles share price currently trades at $16.37. Over the past 12 months, Coles shares are 5.6% higher but have dropped 11.5% since the start of 2021.
Only yesterday, despite the drop in sales in Q3, Coles shares had a strong day, appreciating 3.34%. The rise is being attributed to optimistic broker ratings.
Coles Group has a market capitalisation of $21.9 billion.
