Shares in Australian retail and resources conglomerate Wesfarmers recorded their biggest fall in seven years on Wednesday, hit by weaker-than-expected quarterly sales in its Coles supermarket division.
Food and liquor sales growth at Australia’s No. 2 supermarket halved in July-August from the same period last year, according to figures announced by the company on Wednesday.
That sparked concerns that Coles could be losing ground to its main rival Woolworths Ltd and new entrants to the market such as German discount grocer Aldi, pushing down Wesfarmers’ shares by as much as 5.2 per cent.
Michael McCarthy, chief market strategist at stockbroker CMC Markets said, “The market reaction is telling us that this is a significant disappointment to investors”.
“There have been a number of analysts questioning whether it’s as good as it gets for Wesfarmers and these results point to the idea that a peak has been passed. I expect that we’ll see continuing pressure on the share price as investors adjust to this new outlook.”