Coles was slammed in August following a poor result with blame put at the door of inflationary pressures and costs. When comparing Coles to Woolworths, the performance differential is stark as Coles deals with many years of underinvestment in key processes, from logistics and distribution, to technology and consumer experience meaning increasing costs cannot be offset by better productivity, as has been the case at Woolies.
Sentiment has clearly remained poor toward COL and we see no reason to adopt a contrarian stance yet.
- We are starting to see value emerging into fresh multi-year lows.
MM will consider COL ~$15
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