Why is the Woolworths (ASX:WOW) share price trailing Coles by 5% over the past month?

We look at why the biggest supermarket company on the ASX is underperforming its smaller rival.

Key points
  • The Woolworths share price has slumped by 4.6% more than that of Coles 
  • Both supermarket chains have been impacted by Omicron
  • Some brokers are more optimistic about the upside for Coles 

The past 30 days have been rough on the Woolworths Group Ltd (ASX: WOW) share price despite the company's silence.

However, its direct competitor, fellow supermarket giant Coles Group Ltd (ASX: COL) hasn't suffered the same pressure.

The Coles share price has tracked roughly in line with the S&P/ASX 200 Index (ASX: XJO), falling 2.64% over the past 30 days – 0.24% more than the index's own slump.

Meanwhile, the Woolworths share price has stumbled into a hole, tumbling 7.25% since this time last month.

As of Wednesday's close, stock in Woolworths is swapping hands for $34.41. At the same time, a share in Coles will set an investor back $16.62.

Let's take a look at why the ASX's biggest supermarket has been lagging its smaller rival lately.   

A female Woolworths customer leans on her shopping trolley as she rests her chin in her hand thinking about what to buy for dinner while also wondering why the Woolworths share price isn't doing as well as Coles recently

Image source: Getty Images

Why has the Woolworths share price underperformed Coles?

There's no clear reason why the Woolworths share price has underperformed that of Coles over the past 30 days. However, broker expectations might be playing a part.

As The Motley Fool Australia recently reported, Macquarie and Citi have both lowered their price targets for Woolworths to $40 and $39 respectively. Those targets are 13% to 16% higher than Woolworths' current share price.

Meanwhile, Citi expects the Coles share price to get to $19.60 and Morgans has a target of $19.90 – about 18% to 20% higher than it is currently.

How has Omicron impacted Woollies and Coles?

The spread of the COVID-19 Omicron variant in 2022 has impacted both of the ASX supermarket giants.

In early to mid-January, Woolworths asked for patience from customers as supply chain issues and absenteeism at its distribution centres saw some shelves go bare. It also implemented product limits due to the outbreak.

Coles also acknowledged that it was struggling with supply chain issues by announcing a recruitment drive and reinstating product limits. Additionally, the media reported Coles faced significant staff shortages at its distribution centres, too.

Woolworths share price snapshot

Looking back over the past 12 months, the Woolworths share price has outperformed Coles by almost 7%. Woollies shares are down 2.19% compared to the Coles share price, which is down 9.13%.

Over the long term, Woolworths is the stand-out with a 60% gain in its shares over 5 years compared to Coles at 30%.

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 COLESGROUP DEF SET. 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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