What’s happening to the Wesfarmers share price (ASX:WES) this year?

The Aussie conglomerate is having a tough start to 2022…

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Key points

  • The Wesfarmers share price has descended more than 10% since the start of the year
  • COVID-19 is impacting consumer confidence and retail sales
  • The S&P/ASX 200 Consumer Discretionary Index has fallen almost 8% since 31 December

The Wesfarmers Ltd (ASX: WES) share price is plummeting this year.

The Western Australian-based conglomerate’s share price has fallen 10.51% since market close on 31 December to finish this week trading at $53.07. It fell 2.27% today alone.

Let’s take a look at what is impacting the company’s shares in January.

What’s going on with Wesfarmers?

The Wesfarmers share price has been on a steady decline since the start of the year with a few positive bumps along the way.

Retail shares have been falling amid declining consumer confidence due to the COVID-19 Omicron variant.

Early this week, an ANZ-Roy Morgan survey revealed consumer confidence had dropped 8.1 points to its lowest level since October 2020. This followed confidence falling 2.4 points in the first week of January.

The S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ), which includes Wesfarmers, has fallen 7.77% since 31 December.

However, on Monday the Wesfarmers share price had a minor reprieve following the release of its half-yearly results up to 31 December.

The company anticipates its net profit after tax to decline by 12.5% to 16.5% compared to the previous corresponding period. Kmart and Target sales fell 10.3% due to COVID-19 restrictions and Target store closures. However, the results were in line with expectations.

Analysts at Citi maintained their sell rating on the company’s shares this week with a $50 price target. That’s 5.8% less than the current share price. Citi expressed concerns about consumer spending and increased COVID-19 costs.

However, there could be brighter days coming in the view of some analysts. Morgans upgraded Wesfarmers shares to a buy rating on Tuesday, describing the company as “high quality”. The broker gave the company a price target of $60.80. That is 14.6% more than the current share price.

Wesfarmers share price snapshot

The Wesfarmers share price has returned 1.6% in the past 12 months. This week it has fallen 1.7%, while it has slumped 9.97% over the past month.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has returned 5.16% in the past year.

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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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