December has been pretty dire for the Woolworths (ASX:WOW) share price. Here’s why

Here’s what the supermarket giant has been up to this month…

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SCA share price a child who's been crying with a sad look on his face sits iin the child seat of a supermarket trolley in a supermarket aisle lined with grocery items.

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This month has been tough for the Woolworths Group Ltd (ASX: WOW) share price.

Over the course of December, the company has released news of a tough half-year’s trade and placed a surprise bid for a contended pharmaceutical entity.

As of yesterday’s close, the Woolworths share price is $38.52, 5.63% lower than it was at the end of November.

Let’s take a closer look at what’s been driving the supermarket giant’s stock lately.

What weighed on the Woolworths share price this month?

The first news Woolworths released to the market in December was of its surprise bid to take over Australian Pharmaceutical Industries Ltd (ASX: API), despite Wesfarmers Ltd (ASX: WES) having already lobbed an accepted offer.

Woolworths offered API shareholders $1.75 cash for each share in the Priceline owner. That values API’s equity at $872 million.

For comparison, Wesfarmers bid just $1.55 cash per share.

However, it might not be that simple for Woolworths to win control of API.

The Pharmacy Guild of Australia quickly stepped up to ponder why Woolworths, with its interests in alcohol, tobacco, gambling, and nightclubs, would want to own a pharmaceutical company.

Additionally, Wesfarmers later vowed to vote its stake in API against Woolworths’ bid. It holds 19.3% of the takeover target.

The major news to weigh on the Woolworths share price was, however, still to come.

On 14 December, Woolworths’ stock tumbled 7.6% after the company released a trading update for the first half of financial year 2022.

Within it, the supermarket giant detailed a period of lesser sales and increased costs – both linked to outbreaks of the Delta variant around Australia.

Woolworths Group CEO Brad Banducci commented on the company’s disappointing performance, saying:

COVID has had a significant impact on costs, even more so than last year due to the combination of both direct COVID-related costs, together with the indirect impacts from disruption caused by COVID.

Despite this month’s dip, the Woolworths share price is still in the long-term green. It’s currently 13% higher than it was at the start of the year.

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Motley Fool contributor Brooke Cooper has no position 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 owns and has recommended Wesfarmers Limited. 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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