The Coles Group Ltd (ASX: COL) share price was one of the worst performers on the ASX 200 on Wednesday.
The supermarket giant's shares finished the day a disappointing 6% lower at $11.37.
This decline leaves the Coles share price trading within a whisker of its 52-week low of $11.26.
Why did the Coles share price crash lower?
There appears to have been a couple of catalysts for this share price weakness. The first was the half year results release of rival Woolworths Group Ltd (ASX: WOW) yesterday morning.
Although Woolworths' Australian Food business was arguably its strongest performer during the half, management's outlook for the second half appears to have spooked investors.
Woolworths Group CEO, Brad Banducci, warned that trading conditions remain challenging in the supermarket industry. He said: "Despite our sales improvement, the market remains challenging with subdued consumer demand and input cost pressures."
Another potential catalyst for the selling was the reaction from brokers to its own half year results which were released on Tuesday.
According to a note out of Ord Minnett, its analysts downgraded Coles shares to a lighten rating from hold and slashed the price target on them from $12.25 to $11.00. Coles' half year results fell short of its expectations and the broker has concerns over the challenges that it faces.
A similar view was shared by Credit Suisse which has held firm with its underperform rating and has a $10.84 price target on its shares. It also appears concerned with the near term challenges that the supermarket giant faces and expects earnings growth to be weak.
Should you invest?
Whilst trading conditions are tougher than expected and Coles' higher costs were a surprise, with its shares trading at 17x earnings I think this has been priced in now. This could make it worth considering an investment with a long-term view along with former parent Wesfarmers Ltd (ASX: WES).
