Woolworths Group Ltd (ASX: WOW) shares have slumped into the red in Tuesday afternoon trade.
At the time of writing, the supermarket giant's shares are down around 0.5% and are changing hands at $38.42 a piece.
The shares have come off the boil recently after reaching an all-time high of $40.66 in early August.
Since then, the ASX consumer discretionary shares have slipped around 6%.
But the latest decline has barely made a dent in the amount of gains Woolworths shares have enjoyed over the past year.
For the year to date, the shares are up around 31%, and they're 18% higher than 12 months ago.
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What's driven the Woolworths share price rally this year?
It hasn't been smooth sailing for the Woolworths share price over the past 12 months, and some volatility continued throughout early 2026. But the shares have climbed higher overall.
The business made headlines earlier this year after it posted its third-quarter sales update in April, revealing a 4.5% increase.
At the time, the company also said underlying trading momentum remained solid, but management noted they had seen "some signs of increased customer caution". Investors were spooked and quickly offloaded their shares.
Woolworths shares also gained attention in June following media reports about the company's plans to offshore hundreds of corporate roles. The move is part of a $400 million office cost reduction push to simplify operations and reduce costs.
Since hitting a low in mid-May, Woolworths shares have now risen around 18%.
It looks like the increase was mostly driven by investor confidence that the turnaround is coming to fruition. There is renewed investor confidence that the retailer's earnings are recovering after a difficult period in late 2025.
Woolworths posted a stronger-than-expected first-half profit in February and continues to pursue cost-cutting initiatives to support margins and earnings over time.
The company is due to announce its FY26 results tomorrow.
Are the supermarket shares a buy, sell, or hold now?
Market experts appear to be reserved about the outlook for Woolworths shares ahead of the company's results announcement.
TradingView data shows the majority of analysts (eight out of 17) have a hold rating on Woolworths shares. Another three rate the shares as a buy/strong buy, and six rate the shares as a sell/strong sell.
Although after a strong rally, it looks like the shares are now trading above fair value.
The average $37.39 target price implies a potential 3% downside, at the time of writing.
Although some forecast that the shares could drop 10% to $34.60 over the next 12 months. Meanwhile, others think Woolworths shares have the potential to climb 6% to $40.90 per share at the time of writing.
UBS downgraded Woolworths shares to a sell rating earlier this month, but raised its 12-month price target to $39.
