Why did the Wesfarmers share price tumble 11% in June?

We check what was weighing on the conglomerate’s stock last month.

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Key points

  • The Wesfarmers share price suffered an 11% fall last month to close June at $41.91
  • The retail giant's tumble came amid rising rates and an inflationary environment
  • The company also conducted a strategy briefing early last month

The Wesfarmers Ltd (ASX: WES) share price suffered last month amid rising interest rates and an update on the company’s strategy.

The Wesfarmers share price ended June 11.19% lower than it closed May, trading at $41.91.

For context, the S&P/ASX 200 Index (ASX: XJO) slipped 8.9% last month while Wesfarmers’ home sector – the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) – fell 7.3%.

Let’s take a look at what might have weighed on the ASX 200 retail-focused conglomerate behind the likes of Bunnings, Kmart, and Officeworks in June.

What dragged on the Wesfarmers share price in June?

The Wesfarmers share price continued its multi-month downturn in June, tumbling another 11%. That saw it trading 30% lower than it was at the start of 2022 as of the end of last month.

And rising interest rates and inflation are likely among the biggest weights on the stock this year.

Consumer discretionary shares were among those hardest hit when the Reserve Bank of Australia announced another rate rise in June. That saw the benchmark interest rate rise 0.5% to 0.85%.

RBA Governor Philip Lowe also flagged the possibility of further rate hikes this year.

The move will likely see Australians’ pockets feeling lighter and could spur a shift away from retail spending. That, in turn, could have damped sentiment for Wesfarmers shares.

The market also heard news from Wesfarmers last month. The company conducted a strategy briefing on 2 June.

An accompanying presentation outlines the company’s plans to expand its e-commerce offerings, Bunnings, API, and WesCEF.

The latter’s growth will be bolstered by additional spending on the company’s Mt Holland lithium project.

Wesfarmers also noted its inventory levels are higher than normal. That’s due to stockpiling in the face of supply chain disruptions during the first half.

It also looked to reassure the market of its ability to weather the current inflationary storm, saying:

Wesfarmers’ retail divisions are well equipped to manage inflationary pressures and view this as an opportunity to profitably grow share while extending value credentials.

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 has positions in and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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