What to expect from Coles and Woolworths Q1 results

As the Q1 results for both Woolworths (WOW) and Coles (COL) loom, we take a look at what analysts are thinking and what the companies themselves have said on their outlook.

Coles share price: recent moves at a glance

Coles (ASX: COL) is set to release its first quarter FY20 sales results on October 29, 2019.

It will be interesting to see how the market reacts to these results, given the already-strong performance of the Coles share price over the last ten months. For reference, while the ASX 200 has risen just 20% in that time, Coles has steadily outpaced such gains, running up 27% since January.

For such a large enterprise Coles reported good sales growth in FY19, with revenue rising 3% to A$35.0 billion. The company also noted that it had delivered its:

‘47th consecutive quarter of Supermarkets comparable sales growth.’

FY20 guidance in focus

During Coles’s FY19 results, the company gave some broad indications of what investors could expect from FY20 as well as the first quarter itself. For instance, it was noted that:

‘By way of a Q1 FY20 trading update, Little Shop 2 has again resonated with our customers and is driving strong engagement. As envisaged, cycling the comparable sales growth from last year’s highly successful Little Shop campaign will be challenging given competitor activity in the market.’

For reference, Woolworths’s analogous product offerings are Lion King collectibles.

In addition to this and taking a longer-reaching view, Coles management commented that:

‘The Smarter Selling initiatives in FY20 are anticipated to deliver annualised benefits in excess of $150 million.’

Investors will likely be keen to see how – if at all – these benefits, as well as the concept of ‘engagement’ has factored in Coles’s Q1 FY20 top-line sales growth.

The analyst take

Overall, analysts have taken a relatively cautious view on Coles (ASX: COL) – assigning it a consensus hold rating. Of the 14 analysts covering the stock, two rate it a buy, one rate it overweight, six rate it a hold, two rate it underweight and three rate it a sell, according to the Wall Street Journal.

At Coles’s size: growth is hard to come by, after all.

Woolworths and the street

Woolworths (ASX: WOW) is set to announce its Q1 FY20 sales results one day after Coles – on October 30, 2019.

Woolworths, like Coles, has seen its share price run ahead of the broader market year-to-date – rising 28% in that period. Yet this comparable share price performance has not equated to a comparable analyst consensus view.

Overall, the analyst consensus is lower for Woolworths than it is for Coles, with a consensus underweight rating. Of the 13 analysts covering Woolworths, two rate it a buy, four rate it a hold and an overwhelming seven rate it a sell, according to the Wall Street Journal.

Woolworths share price

Such uncertainty from analysts seems well reflected in Australia’s equally uncertain economic climate. Indeed, this was a core part of the outlook provided by the Woolworths CEO during the company's recent full-year results.

Here, it was noted that:

‘In F20, we expect the uncertain consumer environment and input cost pressures to remain as well as an impact from new enterprise agreements. We are well placed to respond to these challenges and are excited about what we can achieve together in F20.’

Indeed, Australia’s GDP growth remains weak and household indebtedness high, though the RBA’s hope that lower interest rates would/ will spur growth – though not realised yet – remains hopeful.

Practise trading Australian stocks like Coles and Woolworths with an IG demo account now

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.