Woolworths Group Ltd (ASX: WOW) shares enjoyed a welcome day of outperformance on Monday.
Shares in the S&P/ASX 200 Index (ASX: XJO) supermarket giant closed up 1.07% yesterday, trading for $30.24 apiece.
But, as you can see in the below chart, Woolworths stock has broadly underperformed the benchmark in 2024.
On 2 January, you would have paid $37.51 per share. This means that the stock has lost 19.38% in the year to date. That's well behind the 10.43% gains posted by the benchmark index over this same period.
Though shareholder pain would have been modestly alleviated by the $1.44 a share in fully franked dividends they'd have received from their Woolies stock since January.
2024 has seen the Woolworths share come under pressure on numerous fronts.
Headwinds included the government looking into whether it should force Coles Group Ltd (ASX: COL) and Woolworths to divest some of their businesses to increase competition.
There have also been allegations around misleading sales price claims. And most recently, the supermarket had to deal with supply chain disruptions driven by union actions, leaving shelves at some of its supermarkets sparsely stocked.
So, after a tough year, are Woolworths shares a buy for 2025?
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Are Woolworths shares a buy?
For some greater insight into the outlook for Woolworths shares, we turn to Catapult Wealth's Dylan Evans and Shaw and Partners' Jed Richards (courtesy of The Bull).
"The supermarket giant lifted group sales by 4.5% in the first quarter of fiscal year 2025 when compared to the prior corresponding period," Evans noted. "However, value conscious shoppers are buying discounted products, which led to a lower margin sales mix."
According to Evans:
Australian food earnings before interest and tax (EBIT) for the first half is now forecast to be below previous expectations. WOW expects EBIT to range between $1.480 billion and $1.530 billion compared to $1.595 billion in the first half of fiscal year 2024.
With that in mind, Catapult Wealth has a hold recommendation on Woolworths shares amid expectations of a pending turnaround.
"The company is addressing the issues and taking steps to improve its financial performance," Evans said.
Jed Richards of Shaw and Partners also has a hold recommendation on the ASX 200 supermarket stock.
"The supermarket giant recently updated the market about supply chain industrial action in relation to enterprise agreements at three distribution centres in Victoria and one in New South Wales," Richards said. "The company announced Australian food sales had been negatively impacted by about $50 million up to December 2."
Explaining the hold recommendation, Richards has an optimistic outlook for Woolworths shares in 2025 and beyond.
"The share price is at the bottom of its trading range, and the fully franked dividend yield should exceed 3% in fiscal year 2025," he said.
Richards concluded:
In our view, Woolworths is clearly the Australian supermarket leader, and sales should consistently grow for many years. We suggest holding the shares through this tougher period before a brighter outlook emerges moving forward.
