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How does the Coles (ASX:COL) share price perform during lockdowns?

Will more lockdowns sink or swim the Coles share price?
The post How does the Coles (ASX:COL) share price perform during lockdowns? appeared first on The Motley Fool Australia. –

The Coles Group Ltd (ASX: COL) share price has been trending higher in the past few weeks, rallying to a 7-month high of $18.12.

This follows a resurgence of COVID-19 cases across Australia and a sweep of lockdowns across major cities and now the Hunter region of NSW.

What can lockdowns in the past tell us about the Coles share price?

Did the Coles share price benefit from previous lockdowns?

Coles rallied strongly after the March 2020 sell-off. Shares in the leading supermarket surged 26% from $15.27 in late May to all-time highs of $19.26 by 13 August.

Despite finding success amid lockdowns, Coles shares crashed on two occasions in the August 2020 and February 2021 reporting seasons.

On 18 August, the Coles share price edged 0.9% lower to $18.71 following the release of its full-year FY20 results. Over the next couple of weeks, Coles shares lost another 9.78% to $16.88 by 9 September.

A similar situation took place when the company released its 1H FY21 results on 17 February. The Coles share price tanked 5.3% to $17.20.

The harsh selling continued for the next few days, dragging it to a 10-month low of $15.32 by 26 February.

In the results, Coles was very cautious about its outlook, with management saying:

Depending on COVID-19, vaccine roll out and efficacy, and other factors, sales in the supermarket sector may moderate significantly or even decline in the second half of FY21 and into FY22. Coles will be cycling elevated sales from COVID-19 in Supermarkets late in the third quarter, for the remainder of the second half, and most of FY22.

Retail trade figures point to strong supermarket sales

Retail turnover figures from the Australian Bureau of Statistics (ABS) have highlighted a particularly strong performance from supermarkets.

In May, the ABS reported an 0.1% increase in retail trade turnover, seasonally adjusted.

Despite the small increase, the ABS noted that Victoria experienced a 4.0% increase in food retailing, driven by strong turnover figures from supermarkets.

The latest figures from June flag a 1.8% month-on-month decline for retail turnover.

Despite the decline, the ABS reported a 1.5% increase in food retailing within industry subgroups, including supermarkets.

Coles share price snapshot

The Coles share price is down 2.05% year-to-date, a significant improvement on its -17% year-to-date return in late February.

Investors should keep an eye out for the company’s full-year FY21 results, which are scheduled for release on Wednesday, 18 August.

The post How does the Coles (ASX:COL) share price perform during lockdowns? appeared first on The Motley Fool Australia.

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More reading

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Motley Fool contributor Kerry Sun 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 owns shares of and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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