The S&P/ASX 200 Index (ASX: XJO) is wrapping up the trading week on a decidedly sour note this Friday. At the time of writing, the ASX 200 has dropped by a painful 0.99% and is back below 8,100 points. But let's talk about what's going on with the Woolworths Group Ltd (ASX: WOW) share price.
Woolworths shares are having an awful day. On the surface, it doesn't look too severe, with the supermarket operator and consumer staples stock outperforming the broader market with a 0.37% loss. But this pulls Woolworths shares down to $29.85 each. That's after the company sank as low as $29.75 earlier this morning.
Not only is that a new 52-week low for the Woolworths share price, but the lowest this company has traded at in more than four years. You'd have to go back to COVID-ravaged May 2020 to find the last time this company was going for these kinds of prices. Yowser.
Check it out for yourself below:
Why is the Woolworths share price at a four-year low today?
Today's lows are the culmination of a few factors that have made 2024 one of the worst years for Woolworths' share price in a long time.
The year didn't get off to a good start with the release of the company's half-year earnings report back in February. Thanks to a $1.5 billion writedown of the company's New Zealand division, Woolies posted a net loss of $781 million for the half. Together with the concurrent shock resignation of CEO Bradford Banducci, investors weren't impressed. Upon these developments, Woolworths shares tanked 7% at the time.
Woolworths has also had to deal with losing market share across 2024 to arch-rival Coles Group Ltd (ASX: COL). Both Woolies' March quarterly report and full-year earnings showed the company growing its sales at a slower pace than Coles. Under these conditions, it was difficult for investors to regain their confidence.
But the company's latest lows that we are discussing today can be attributed to the latest numbers from Woolies.
On Wednesday, we went through Woolworths' latest quarterly report, which covered the three months to 6 October. Despite reporting a 4.5% increase in sales over the quarter to $18 billion, it was some pessimistic commentary from new CEO Amanda Bardwell that seemed to spook investors into sinking the Woolworths share price.
Here's some of what Bardwell had to say:
Customers remain highly value-conscious and continue to purchase more items on special or trade down to lower priced items including Own Brand. These competitive factors together with strong eCommerce growth is leading to a lower margin sales mix which has impacted earnings.
The CEO wasn't exactly painting a picture of a bright future ahead of the company either:
While the key Q2 trading period remains ahead of us, Australian Food EBIT for the first half is forecast to be below our previous expectations. We currently expect H1 F25 EBIT, including $40 million of incremental supply chain costs, to be within a range of $1,480 million to $1,530 million compared to $1,595 million in H1 F24.
Foolish takeaway
So it seems that, with investor confidence in Woolworths already low, this week's quarterly report was enough for investors to push this company to the new multi-year lows we are seeing today. Let's see if the Woolworths share price can stage a recovery over the rest of 2024.
