The Woolworths result quickly reversed market sentiment on Thursday. Photo: Patrick ScalaConsumer stocks led n shares sharply lower on Thursday following a dreadful quarterly sales report from Woolworths, while ANZ reported full-year profit numbers and Blackmores shares briefly hit $200 each.
The market started the day in positive territory following strong gains on Wall Street, which reached two-month highs. The Dow Jones lifted 1 per cent after the US Federal Reserve implied it was more open to a December rate hike.
However, the Woolworths result quickly reversed market sentiment, especially as Wesfarmers shares were also sold off as a result.
Consumer staples was by the far the worst sector on the day, losing 5.3 per cent. All sectors bar utilities stocks were in the red as the benchmark ASX200 index fell 1.3 per cent to 5266.9 and the broader All Ordinaries declined 1.2 per cent to 5310.2.
The banks were also down, with ANZ falling 2 per cent to $28.17 after reporting record full-year profits of $7.2 billion, but also slowing earnings growth, flat dividends, and shareholder returns squeezed by the dilutive effect of its recent capital raising.
Commonwealth Bank shed 0.6 per cent to $77.17 and National Bank declined 4 per cent to $30.46 but Westpac performed relatively well, finishing flat at $31.92.
Woolworths crashed 9.8 per cent to $24.70 after warning that net profits will fall as much as 35 per cent in the December half to between $900 million and $1 billion.
Same-store n food and liquor sales fell for the second consecutive quarter – down 1 per cent in the three months to October 4 – as Woolworths struggled to reverse customer perceptions that its prices are higher than Coles.
The decline in first-quarter same-store food and liquor sales followed a 0.9 per cent drop in the June quarter, indicating that Woolworths supermarkets are continue to lose momentum. Analysts had been forecasting same-store sales to fall between 0.5 per cent and 1.1 per cent.
Fears of continuing price wars in the grocery sector resulted in competitor Wesfarmers dropping 4.3 per cent to $40.18, while Metcash was walloped even worse than Woolworths, losing 10.4 per cent to $1.20.
“There’s a big question now over some of these consumer stocks,” said Invast chief market analyst Peter Esho. “Woolworths can only fight its way out of this through pricing – and if they discount the rest of the market has to discount and it’s going to drive down margins.
“Woolworths is not just a short-term earnings thing. There’s big questions now over where strategy is at, where management’s at, where the board is at. The whole thing is falling apart.”
Overnight, iron ore slumped 3 per cent to $US49.95 per tonne – under $US50 – although oil recovered somewhat, with Brent crude up $US2.10 or 4.5 per cent, to $US48.91 per barrel.
BHP weakened 1.3 per cent to $23.47 and Rio Tinto slipped 1.8 per cent to $51.14. Pure-play iron ore miner Fortescue gave up 2.2 per cent to $2.20 and Woodside Petroleum fell 1 per cent to $29.34 despite the improving oil price.
Telstra retreated 1.4 per cent to $5.50.
Blackmores surged 12.9 per cent to $175.51 after news it was expanding beyond its core business to enter the infant formula market through a partnership deal with dairy group Bega Cheese, as profits continue to surge from vitamins sales to China.
Blackmores has experienced an incredible near 500 per cent rise in its share price over the past 14 months because of heavy demand for its vitamins and health supplements in China.
Newcrest’s chances of meeting its full year gold production guidance have taken a blow with the company confirming a major piece of kit at its most important mine will be out for longer.
An important part of the production process at the Cadia mine in NSW failed about 12 days ago, and Newcrest said today it would be “at least five weeks” before it was fixed. The gold miner crumbled 7.6 per cent to $12.72.