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Despite the broader market trending slightly lower on Tuesday, some of Australia’s top retail stocks—Coles Group Ltd (ASX:COL), Wesfarmers Ltd (ASX:WES), and Woolworths Group Ltd (ASX:WOW)—are experiencing more significant declines. At the time of writing:
- Coles shares have dropped 2% to AU$18.54.
- Wesfarmers shares have fallen 2.5% to AU$70.59.
- Woolworths shares are down 3.6% to AU$34.53.
What’s Behind the Declines?
Interestingly, these declines are not due to negative news related to retail sales, broker downgrades, or any company-specific updates. Instead, the reason for today’s performance is a routine market event: the stocks are trading ex-dividend.
Understanding the Ex-Dividend Impact
When a stock goes ex-dividend, it means that the entitlement to the upcoming dividend payment is now settled. New buyers of the stock will no longer receive the upcoming dividend, which naturally leads to a decrease in the share price to reflect this loss of value. The price drop typically aligns with the dividend's value since the dividend is considered part of the company’s overall valuation.
Let’s delve into the specifics for each of these retail giants:
Coles Group: Dividend Details
Last month, Coles Group reported a 5.7% increase in revenue, reaching AU$43.6 billion, and a 4.1% rise in underlying net profit after tax (NPAT), totaling AU$1.21 billion for FY 2024. These solid results enabled the company to declare a fully franked final dividend of 32 cents per share. Shareholders eligible for this dividend can expect to receive their payments on 25 September.
Wesfarmers: Dividend Details
Wesfarmers also released its annual results last month, posting a 1.5% year-over-year revenue increase to AU$44.2 billion and a 3.7% uplift in net profit to AU$2.56 billion. In line with these results, Wesfarmers declared a fully franked final dividend of AU$1.07 per share, which is scheduled to be paid out to eligible shareholders on 9 October.
Woolworths: Dividend Details
Woolworths, meanwhile, reported a 3.7% increase in normalized sales to AU$67.92 billion, although it saw a 3% decline in net profit after tax (before significant items) to AU$1.71 billion. Despite the drop in profit, Woolworths declared a fully franked final dividend of 57 cents per share, which is set to be paid on 30 September. The generous dividend likely explains why Woolworths shares are experiencing the steepest decline today.
