It wasn't a great month overall for the S&P/ASX 200 Index (ASX: XJO) and ASX shares over August. During the month just gone, the ASX 200 slipped by 1.4%, falling from 7,410.4 points down to the 7,305.3 points the index closed at last Thursday. But let's talk about the Coles Group Ltd (ASX: COL) share price.
Coles shares had an even worse August than the broader market. This ASX 200 blue-chip share and supermarket operator started the last month of winter going for $18.19 a share. But by the end of trading last Thursday, the Coles share price had fallen to just $16.27. That's an August fall worth a chunky 10.56%. Check it out for yourself below:
So what went so wrong for Coles last month that saw this company underperform the index so dramatically?
Why did the Coles share price have an August to forget?
Well, we can almost exclusively blame Coles' full-year earnings report that was released on 22 August for the Coles share price's underwhelming August performance.
On the day these earnings were released, Coles shares fell by a horrid 7.08% and set the tone for the whole month. You can see this in the chart above.
As we dove into at the time, these earnings were indeed a bit of a disappointment. Coles did report a 5.9% rise in revenues to $40.5 billion. Apart from that, however, it was mostly bad news. The grocer also revealed a 0.3% slump in net profits after tax (NPAT) from continuing operations to $1.04 billion, as well as a 0.6% fall in earnings per share (EPS) to 78.1 cents.
Coles blamed the weakness in its bottom line on inflationary pressures and increased costs from its fulfilment and distribution centres. But still, it's safe to say investors weren't impressed. As such, we can blame these earnings pretty exclusively for the Coles share price's lacklustre month over August.
But it's not all bad news for Coles investors. Just after the earnings came out, ASX broker Citi reaffirmed its add rating on the Coles share price. As we covered at the time, Citi acknowledged that Coles' earnings "fell well short of expectations" and trimmed its 12-month share price target down to $18.30 a share.
However, Citi argues that sentiment on Coels shares is still too low, and reckons the company's metrics will recover going forward. If this broker is on the money with its share price target, investors could see an upside of more than 15% from the current Coles share price over the coming year.
Let's see what happens. Today, the Coles share price is up 0.19% at the time of writing to $15.89 a share. At this level, this ASX 200 stock has a dividend yield of 4.16%.
