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The ASX200 index is experiencing a decline of approximately half a percent, with Consumer Staples stocks leading the downturn. This decline comes amid ongoing scrutiny from the Australian Competition and Consumer Commission (ACCC) against major retailers Woolworths (ASX:WOW) and Coles (ASX:COL) regarding their marketing strategies following the COVID-19 pandemic.
Coles has seen a notable drop of more than 3.5% after the ACCC initiated Federal Court proceedings concerning its “Down Down” campaign, which ran for over a year starting in early 2022. The ACCC alleges that Coles raised prices on at least 245 products before advertising them as discounted under the Down Down promotion, suggesting that the advertised prices were either the same as or higher than their previous levels. The regulator argues that these representations were misleading, impacting consumer trust.
In response to the allegations, Coles stated that efforts were made to balance the effects of rising costs while still providing value to customers. The current trading price for Coles shares stands at $18.53.
Woolworths is also facing challenges, with its shares down around 3% as it is similarly implicated in the ACCC's investigation related to its “Prices Dropped” program, which operated from 2021 to 2023. The ACCC claims that the prices of 266 items were raised prior to being marketed as discounted, further compounding the scrutiny on these retail giants. Despite the pressure, Woolworths shares have shown some resilience, recovering slightly to trade just above $34.
Adding to the challenges within the food sector, Beston Global Food Company (ASX:BFC) has entered voluntary administration under KPMG. The administration team plans to continue operations while exploring options for sale or recapitalization. Earlier in the month, Beston indicated an offer from a Japanese company for its cheese business located in Jervois, South Australia. This move follows a series of difficulties in the dairy market, which have significantly impacted margins and cash flow. Beston reported an $18.8 million loss for the first half of FY24, resulting in a 50% decline in shareholder value over the past year, with shares last closing at a fraction of a cent in June.
On a more positive note, the utilities sector has seen a rise of over 1.2%, with Energy and Technology stocks also experiencing a modest uptick of about 0.7%. Among the notable performers is biotech company Opthea (ASX:OPT), which has recently secured a position in the ASX300, bolstered by a market capitalization exceeding $900 million. Opthea has rewarded its shareholders with impressive growth of over 150% in the past year and is trading up approximately 4.5% today at around 74 cents.
Overall, the ASX200's movement reflects the ongoing volatility in the market, particularly within the Consumer Staples sector, as regulatory actions and economic pressures continue to shape the landscape for major players like Woolworths and Coles.
