Blue chips Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) are on many investors’ radars right now. The food retailer giants are striding through the pandemic with strong sales and revenues leading to the increased supermarket shares. 

Both companies are listed in the S&P/ASX 50 (ASX: XFL) and have a combined market capitalisation of close to $70 billion. Coles is the smaller of the 2, with a market capitalisation of $22 billion compared to Woolworths nearly $47 billion market cap. So, how are the 2 supermarket conglomerates performing? 

Coles 

Coles operates 2,500 retail outlets nationally, including 800 supermarkets, 900 liquor stores, and more than 700 fuel and convenience retailers. The Coles share price remained relatively robust in the March correction, losing around 17% from peak to trough. Shares are now trading at $16.68, relatively close to their high for the year of $17.17. 

Coles reported a 12.9% increase on its Q3 sales driven by panic buying at the start of the coronavirus pandemic. Supermarket sales increased by 13.8%, recording the division’s 50th consecutive quarter of comparable sales growth. Liquor sales were up by 7.2% and express sales up 4.3%. Coles Online sales revenue grew by 14% in Q3, despite home delivery being temporarily suspended in March. 

Coles Group reported sales revenue for Q3 at $9.2 billion. The Group responded to increased demand by hiring 12,000 extra workers. Beyond the initial panic buying, the fact that Australians are spending more time at home has increased consumption of home-cooked meals and their household items. 

Woolworths 

Woolworths is Australia’s largest supermarket chain, operating some 995 supermarkets across Australia. Including its liquor and Big W brands, Woolworths is behind some 3000 stores across the country. The Woolworths share price fell 20% in the March dip, but has since recovered somewhat and is currently trading down 16% from its 2020 high. 

Woolworths has benefited from the same forces driving increased sales at Coles. Overall, Q3 quarter sales grew by 10.7%. The Australian food business saw growth of 11.3%, Big W grew sales by 9.5%, and liquor also grew 9.5%. The hotels business saw a 12.9% drop in sales with the closure of venues. 

Sales growth continued in April although moderated from rates seen in March. Looking into the Q4, increased costs are expected to continue including costs associated with the temporary employment of 22,000 team members. These incremental costs are expected to be in the range of $220 – $275 million for Q4. The extent to which these costs can be offset will depend on the rate of sales growth over the remainder of the financial year. 

Foolish takeaway 

The supermarket giants saw increased sales as a result of the pandemic but each also incurred increased costs. The outcome of the changes will be revealed in Coles and Woolworths’ full-year results with a close watch on the supermarket shares. 

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Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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After a poor start to the day, in early afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to record a decent gain. At the time of writing the benchmark index is up 0.35% to 5,963.4 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:     

The Altium Limited (ASX: ALU) share price is down 7% to $33.70. The electronic design software company’s shares have come under pressure today after it warned that it was likely to fall short of consensus estimates in FY 2020. Altium advised that this is because the pandemic is impacting its performance during the latter weeks of the financial year. This is historically a strong period for sales.

The Australian Ethical Investment Limited (ASX: AEF) share price has fallen 6% to $8.49. Investors have been selling the ethical fund manager’s shares after the release of its guidance for FY 2020. According to the release, it expects underlying profit after tax before performance fees to be between $6.8 million and $7.5 million. The mid-point of this range represents a 10% increase on the prior year. This compares to its first half profit growth of 38%.

The Flight Centre Travel Group Ltd (ASX: FLT) share price is down 4% to $13.06. A number of travel shares have come under pressure today. This could be due to concerns over a potential second wave of coronavirus in Victoria. If things were to get out of control, it could delay the recovery of domestic travel markets.    

The Transurban Group (ASX: TCL) share price is down 2.5% to $14.77 despite the release of a decent trading update. According to the release, traffic volumes on its toll roads are improving now that restrictions are being eased. For the week commencing 14 June, traffic volumes across the company were down approximately 20% compared to the prior corresponding period. The company also revealed plans to pay a second half distribution of 16 cents per unit.

More reading

• ASX 200 flat: Altium update disappoints, Metcash posts full year loss
• These 5 ASX shares were last week’s top performers
• Transurban share price falls despite a positive market update
• Altium share price sinks 7% lower after FY 2020 trading update
• ASX 200 Weekly Wrap: ASX back in the green

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium and Australian Ethical Investment Ltd. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. and Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why Altium, Australian Ethical, Flight Centre, & Transurban are dropping lower appeared first on Motley Fool Australia.

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