The ColesWorth price gouging controversy has grown large enough to affect the ASX – the bourse is down 0.77% or 58.70 points today, pushed down by a sharp 4.24% drop in Consumer Staples stocks.
Most of that damage originated with the offending companies themselves – Woolworths is down 6.77% today and Coles 4.09%.
It wasn’t just the price gouging allegations or prickly Four Corners interview that dragged share prices down; Woolworths points to changes in consumer behaviour as well. More on that in a moment.
Materials and Comm Services also had an impact, shedding 1.55% and 1.21% each.
Info Tech gained 1.98% and Utilities 1.09%, but it wasn’t enough to stave off the bears.
Commodities were mostly in the green today - silver gained 2.26%, copper 2.2%, West Texas Crude 1.47% and platinum 0.97%. Tin was the exception, with a 2.46% drop.
The ASX has gained 0.7% over the last five days but still remains essentially unchanged for the year to date.
Woolworths CEO resigns
eToro market analyst Josh Gilbert joins us to discuss Woolworth’s recent losses and the CEO’s retirement, which likely wasn’t prompted by his disastrous Four Corners interview.
"Woolworths today announced a wider net loss than expected of A$781 million in the first half of the fiscal year, whilst also warning that sales to start this year had begun to moderate with consumers becoming more cautious,” Gilbert wrote.
“Australian food sales were the bright spot, rising by more than 5% year-over-year and blowing past estimates, whilst margins grew.
“This spot of positivity, though, will unlikely be enough to please shareholders. The business is facing a PR nightmare right now, which is partly why shares are on the back foot this year, down by 3.5%.
“The big news was Woolworths’ announcement that CEO Brad Banducci would step down as CEO and be replaced by Amanda Bardwell starting September 1st.
“The announcement will garner plenty of chatter given Banducci’s disastrous Four Corners interview this week – although this leadership change has likely been in the works for months and not a direct result of the CEO’s headline-grabbing walkout.
“The changing of the guard at Woolworths comes amidst an arduous period for the business that has seen it thrown into the limelight – and not in a good way.
“Shifts in senior leadership will often result in some uncertainty for shareholders, especially given Brad Branducci has spent eight years in charge.
“However, for some investors, this may feel like a timely pivot, and it may prove to be a prudent decision with recent challenges not handled in the way many would have likely expected.
“Amanda Bardwell appears to be a great fit to take over the helm at Woolworths, having run two highly successful businesses in eCommerce and Loyalty.
“She is a top performer and hiring from within takes away that external risk, which is all good news for investors and concerned stakeholders.
“As the new CEO takes the reins, Woolworths will be hoping that this carefully orchestrated leadership shift, coupled with Bardwell's proven capabilities, will not only weather the storm but also instil confidence in investors looking for signs of a resilient turnaround."
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