Woolworths Limited (ASX: WOW) shares have been on a wild 24 months.
In that time, the Woolworths share price is down more than 41%.
A failed investment in home improvement, via the Masters brand and to a lesser extent, Home Timber & Hardware, was likely a catalyst for analysts issuing sell orders on the company's shares.
But the biggest concern is competition in the supermarkets division, where Woolworths makes the bulk of its sales and profit. Woolworths' supermarkets have come under intense pressure in recent years as managerial complacency, a resurgent Coles (owned by Wesfarmers Ltd (ASX: WES)) and Aldi squeezed profit margins.
With Dick Smith holdings Limited (ASX: DSH) long gone from the Woolworths portfolio of brands and Big W arguably lagging rival Kmart, there doesn't appear much to get excited about.
That's despite Woolworths shares changing hands for just 14x earnings.
Buy, Hold or Sell?
I recently sold my Woolworths shares because I was no longer convinced in the long-term profitability of the business. Without a home improvement offering and the prospect of a price war in supermarkets, Woolworths appears to have its back up against the wall.
Having said that, however, Woolworths does have a sophisticated and efficient supply chain and significant presence in key markets, so it's not a complete write-off.
