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Why aren’t Woolworths shares climbing like Coles and Metcash?

Woolworths Group Ltd (ASX: WOW) shares are down 10.31% in March, but given the current bear market, that’s still a big outperformance. Compared to the S&P/ASX 200 Index (ASX: XJO) falling 24.82%, the Aussie retailer’s shares are booming.

But what about if we compare Woolworths to its supermarket peers?

How have ASX 200 supermarket shares performed in March?

While Woolworths shares are falling lower this month, its competitors’ shares are on the rise. The Coles Group Ltd (ASX: COL) share price is up 10.70% since the start of month and is one of only 3 ASX 200 shares to be up double digits in the current bear market.

The leader of that pack at the moment is Metcash Limited (ASX: MTS). Metcash shares are up a tidy 25.91% in March and 21.01% in 2020. That’s a very handy outperformance, largely thanks to its strong grocery business and its IGA supermarket brand. 

One of the biggest factors has been the recent panic buying in Aussie supermarkets. People flocked to stock up on supplies as the coronavirus pandemic hit our shores. In fact, most of the recent crash can be attributed either directly or indirectly to the panic.

But why isn’t the Woolworths share price keeping pace with its competitors in 2020?

Being a conglomerate can have its downsides

The Woolworths Group is a conglomerate, meaning it consists of many different businesses. While the supermarkets division is perhaps the most recognisable, it also has significant exposure in other parts of the economy. This includes Big W, its financial services and insurance arm, and importantly, Endeavour Group.

Endeavour Group was created on 4 February 2020 by merging the Woolworths drinks business and ALH Group. ALH Group operates over 330 licensed venues, which have obviously been hit hard by government restrictions on pubs and clubs.

This could explain why the Woolworths share price is down 10.31% after standing down 8,000 workers last week

Should you buy Woolworths shares?

Woolworths shares are arguably good value compared to Metcash right now. While there might be more pure exposure from a spun-off business like Coles, I think the price differential could be unwarranted.

Whichever ASX supermarket share you are looking to invest in, it looks like their cash flows will be solid in the coming months. Supermarkets have remained open around the world despite coronavirus shutdowns and that bodes well for share prices in 2020.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.