Woolworths Group Ltd (ASX: WOW) shares have had a difficult time in 2024 and are down more than 19% this year.
The supermarket giant is in the spotlight again on Tuesday after its New Zealand operations were hit with criminal charges over allegedly misleading pricing and fake discounts.
Whilst the news isn't price-sensitive in any way, it does add to a list of pressures the company has been juggling these past few months.
The Woolworths share price is currently $30, down less than 1% on the day.
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Woolworths to face charges in NZ
Woolworths is in hot water after the New Zealand Commerce Commission (NZCC) announced it is prosecuting the supermarket's NZ arm and two other supermarkets for possible breaches of the country's Fair Trading Act.
The charges relate to claims of inaccurate pricing and misleading specials at Woolworths NZ stores.
The Commission has decided to file criminal proceedings against Woolworths New Zealand Ltd for alleged breaches of section 10 of the Fair Trading Act 1986.
The Commission alleges that, between January 2022 and September 2024, Woolworths New Zealand Ltd breached the Fair Trading Act by misleading consumers about the price they were to pay, or paid, for grocery products.
This occurred mainly in circumstances where:
- the advertised prices for grocery products did not match the price charged to consumers at the point-of-sale; and
- grocery products were advertised at a special or discounted price which did not offer a genuine 'special'.
Woolworths has yet to publicly respond to the matter, but this isn't the first time the supermarket giant has faced scrutiny over its discount practices.
The Australian Competition and Consumer Commission (ACCC) recently pursued the company over discounts it alleges "were, in fact, illusory".
The regulator conducted a series of public hearings into the industry in November as part of its Supermarkets Inquiry 2024-25.
Adding to the retailer's woes, Woolworths has been grappling with strike action at key distribution centres located in Victoria and New South Wales.
According to The Australian, reports estimate the action has already cost the company an estimated $140 million in lost sales.
These disruptions have caused widespread supply chain issues, leaving supermarket shelves empty in some areas.
The supermarket reached a resolution with the United Workers Union (UWU) last week after putting forward terms.
Are Woolworths shares a buy?
Brokers are split on Woolworths shares. According to CommSec, the consensus analyst estimate rates it a hold.
But Goldman Sachs recently highlighted Woolworths as a buy.
According to the broker, Woolworths has many business advantages over peers, including its extensive store network, e-commerce platform, and use of data in decision-making.
Goldman acknowledges the hurdles Woolworths faces, including the operational disruptions and a shifting focus under its new CEO.
But it values Woolworths shares at $36.20 apiece, roughly a 20% upside excluding dividends.
Foolish takeout
Woolworths shares have had a difficult year on the chart in 2024. The corporate regulator in NZ is now charging the company, adding to the ACCC's scrutiny here in Australia.
Time will tell what, if any, fallout there is on the company's stock price from here.
In the last 12 months, Woolworths shares are down 17%.
