Here’s why the Woolworths (ASX:WOW) share price is up 10% since May

The retail giant has enjoyed a positive couple of months.

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Woolworths Group Ltd (ASX: WOW) shares climbed higher yesterday. By market close, the Woolworths share price was trading at $38.21, 0.53% higher than the previous day.

In fact, the retail giant’s shares have climbed by around 10% since 1 May. Let’s take a closer look at what Woolies has been up to over the last two months.

New ‘dark store’

The company has announced plans to open a dark store in a location in Southern Sydney. A dark store only takes online orders, with no shop-front per se.

Woolworths intends to develop similar stores dotted throughout Sydney as the company pivots to prioritise its e-commerce division.

Woolworths’ share price jumped on the news, hitting an intraday high of $38.33 during yesterday’s session.

The Endeavour demerger

Woolworths commenced and completed the $10 billion demerger of its Endeavour drinks business in June. The Woolworths share price jumped almost 3% on 28 June upon completion of the demerger.

Shareholders voted overwhelmingly in favour of the plan, with 99.85% of the votes cast in favour of the demerger.

The deal is also set to return between $1.6 billion and $2 billion in cash to Woolworths shareholders via dividends.

Following the demerger, Woolworths chief executive Brad Banducci said:

We are excited to focus on our retail ecosystem with our customers and everyday needs at the core, while at the same time partnering with Endeavour Group. We are committed to creating better experiences together for a better tomorrow for all our stakeholders

As a result of the demerger the original Woolworths shares were split into two ASX-listed companies with the newly formed Endeavour Group Ltd (ASX: EDV).

Since the transaction was announced in May, investors have pushed the Woolworths share price up from $34.81 to yesterday’s $38.21.

PFD acquisition

Back in June, the Australian Competition and Consumer Commission (ACCC) announced it would not oppose Woolworths’ acquisition of PFD Food Services.

PFD is one of Australia’s premier foodservice distributors, and Woolworths received the green light for its planned $552 million investment in the company on 11 June.

With this, Woolworths targeted a 65% stake in PFD, and the transaction was finalised at the end of June.

Speaking on the deal, Woolworths’ Banducci said:

This investment is a logical adjacency for Woolworths Group and further supports the evolution of the group into a food and everyday needs ecosystem.

Since the transaction was finalised on 28 June, the Woolworths share price has climbed from $37.85 to today’s trading.

Woolworths share price snapshot

The Woolworths share price has had a choppy ride over the past 12 months, posting a return of around 12%.

Year to date, Woolworths shares have returned 10%, which has lagged the S&P/ASX 200 Index (ASX: XJO)’s return of ~11.3% this year.

At the current market price, Woolworths has a market capitalisation of $48.4 billion.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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