Coles and Woolworths shares shrug off Greens vow to 'dismantle their power'

The Greens are targeting the profit growth posted by Coles and Woolworths at a time when consumers are struggling.

| More on:
Woman thinking in a supermarket.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Woolworths Group Ltd (ASX: WOW) shares are marching higher on Monday, up 1.4% to $35.03.

Coles Group Ltd (ASX: COL) shares are only a step behind, up 1.2% to $15.35.

For some context, the ASX 200 is up 1.1% at this same time.

Both of the S&P/ASX 200 Index (ASX: XJO) retail giants are outpacing the broader market rally despite a push from the Greens for a parliamentary inquiry into their duopolistic pricing powers.

Here's what's happening.

Are Coles and Woolworths shares earning too much in profits?

There's no doubt that both of the ASX 200 supermarket chains are profitable ventures.

As for Woolworths shares, for its FY 2023 results, the company reported a 5.7% year on year increase in sales to $64.29 billion. And net profit after tax (NPAT) before one-offs leapt 13.7% to $1.72 billion.

Over at Coles, the supermarket reported FY 2023 sales revenue grew 5.9% for the prior year to $40.5 billion. Total NPAT was up 4.8% to $1.1 billion.

That's all good for shareholders. But these strong results come as rocketing interest rates and high inflation have hit many Aussie consumers hard.

That's not sitting well with Australia's Greens. The party believes a lack of competition in the sector gives the two supermarkets too much control of pricing. And they want parliament to investigate the issue.

Greens Senator Nick McKim said (quoted by Bloomberg), "For too long the big supermarkets have had too much market power. This allows them to dictate prices and terms that are hitting people hard."

McKim added, "We'll find a way to dismantle their power and bring grocery prices down."

As for the parliamentary inquiry, McKim said it would investigate "price gouging" as well as the "concentration of market power in the hands of the two big supermarkets". He vowed this would find a way "to bring down grocery prices".

If that's successful, it should offer some relief to shoppers, while cutting into the profits earned by Coles and Woolworths shares.

A Coles spokesperson (quoted by Reuters) dismissed the concept that the supermarket is gouging its customers, saying the store is "always exploring ways to reduce prices on the products we sell".

They added that Coles has also been hit by inflationary pressures, saying "Construction costs, energy prices, the cost of logistics and packaging have all risen."

A spokesperson for Woolworths indicated there may be a light at the end of the cost pressure tunnel. "As we start to see the rate of inflation ease, we will continue to focus on delivering savings to our customers," they said.

Judging by today's price action, both Coles and Woolworths shares still have plenty of support from investors.

Motley Fool contributor Bernd Struben 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 Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

Supermarket trolley with groceries on top of a red pointing arrow.
Consumer Staples & Discretionary Shares

Why the Coles share price could keep rising after the result

An expert has predicted more share price gains for Coles.

Read more »

Woman customer and grocery shopping cart in supermarket store, retail outlet or mall shop. Female shopper pushing trolley in shelf aisle to buy discount groceries, sale goods and brand offers.
Consumer Staples & Discretionary Shares

Is the Woolworths share price too good to pass on?

The supermarket chain has had a shocker this month. So is it time to pounce?

Read more »

A young woman wearing a silver bracelet raises her sunglasses in amazement, indicating positive share price movement in jewellery shares.
Consumer Staples & Discretionary Shares

I'd use the Warren Buffett method and buy this ASX stock

This investment is sparkling.

Read more »

Rocket powering up and symbolising a rising share price.
Earnings Results

Guess which ASX 300 stock is surging 14% amid mounting profits

This ASX 300 stock reported a 53% increase in full year profits.

Read more »

shopping trolley filled with coins representing asx retail share price.ce
Consumer Staples & Discretionary Shares

Everything you need to know about the new Coles dividend

Coles has just revealed its first dividend of 2024.

Read more »

Woman customer and grocery shopping cart in supermarket store, retail outlet or mall shop. Female shopper pushing trolley in shelf aisle to buy discount groceries, sale goods and brand offers.
Earnings Results

Coles share price jumps 6% on strong half-year sales growth

The supermarket giant has released its half-year results. How did it do?

Read more »

Young couple having pizza on lunch break at workplace.
Consumer Staples & Discretionary Shares

Down 27% in 2024, this leading fund manager forecasts a big turnaround for Domino's shares

Domino’s shares could be poised for a big turnaround, according to this leading fund manager.

Read more »

Woman on the phone at a hardware store
Consumer Staples & Discretionary Shares

Kogan share price jumps 14% on massive profit rebound and dividend return

This ecommerce company's sales are down but its profits are surging.

Read more »