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.
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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.
