Welcome to June and winter. Since it is the first day of a new month (and season in this case), it's a good opportunity to reflect on the month that was, and see how some of the ASX's most prominent shares fared. So today, let's examine why the ASX 200 retail and industrial conglomerate Wesfarmers Ltd (ASX: WES) share price had such a dreary month last month.
Wesfarmers shares had a painful May, no way around it. The company began May at $49.41 a share, but finished up yesterday at a price of $47.19 apiece. That represents a one-month fall of 4.49%. Not that the S&P/ASX 200 Index (ASX: XJO) had a good month, mind you. The ASX 200 lost 3.01% over the same period. But still, that makes Wesfarmers a market-losing ASX share over the month just gone.
So what went wrong for Wesfarmers over May? Well, it's not entirely clear. Wesfarmers released no major news, reports, or announcements over the month.
Image source: Getty Images
Why were ASX investors taking the Wesfarmers share price to the cleaners in May?
However, we can point to one event that may have dictated this miserly May performance. On 19 May, the Wesfarmers share price was smashed, falling almost 8% in one day. This was devoid of any company-specific news. However, it did coincide with similar moves across the ASX retail space.
As my Fool colleague Brooke dug into at the time, this sector-wide rout "[seemed] to have been spurred by United States retail monoliths Target Corporation (NYSE: TGT) and, to a lesser degree, Walmart Inc (NYSE: WMT)".
At the time, Target (the US retailer, not the Wesfarmers subsidiary) had just dropped a disappointing quarterly earnings report. This contained a revelation that the company's earnings per share (EPS) had dropped a staggering 48%. Walmart had also given its own investors a disappointing update the day before that.
Most US retailers were sold off heavily on this news, with the pessimism spilling over the Pacific to the ASX and our own ASX retail sector. After this mid-month drop, the Wesfarmers share price did recover somewhat. But it wasn't enough to stem the losses from that one-day shocker. As such, this seems to be the primary reason why the Wesfarmers share price underperformed the ASX 200 over May and delivered investors such a miserly return.
At the last Wesfarmers share price, this ASX 200 retailer had a market capitalisation of $53.51 billion with a dividend yield of 3.6%
