Ahead of Woolworths' strategy day and store visits next week, Wilson HTM senior research analyst John Lockton said Woolworths' hefty food and liquor earnings before interest of 7.5 per cent to 8 per cent "will in time not be defendable."

"This suggests that earnings expectations from Woolworths and consensus are too optimistic," he said.

Of 16 analysts, 10 have a 'sell' rating on Woolworths and just three rate it a 'buy', according to Bloomberg. Their consensus 12-month price target for Woolworths $28.68, below Tuesday's closing price of $29.80.

Sentiment around Woolworths soured when the one-time market darling announced a surprise downgrade to its full-year forecast and unveiled plans to invest more than half a billion dollars on cutting prices and improving its stores.

The February downgrade followed market-share loss in groceries and "subdued" food and liquor sales in December and January. It led to short sellers targeting Woolworths shares in the belief its share price would continue to fall.

Mr Lockton said the market was wary about how much it will cost Woolworths to get traffic growth back to its flagship food and liquor division, and was unsure how chief executive Grant O'Brien would improve the company's performance.

"How much is he prepared to spend on fighting and defending market share is probably the main game [at the strategy day] on May 6," he said.

"We'll get part of the answer, and in six or 12 months' time, we'll realise that yes, they're going to have to spend more for longer."

One person who will attend the strategy day said Woolworths had been "vague" about whether next year would be worse than this year, and its board and management could be criticised for milking its supermarkets and starting up hardware chain Masters, rather than defending itself against rivals Coles and Aldi.

The attendee said there was no magic investment number that would please the market, but lower earnings for food and liquor were "probably the right thing to get the business back to strength in 2017 and 2018."

Woolworths has forecast profit growth of between 1.8 per cent to 6.6 per cent this financial year, down from earlier guidance of 4 to 7 per cent growth.

It recently scrapped the slight premium it charged for online buys versus in-store purchases. Broker Macquarie estimated that Woolworths was about 2.3 per cent cheaper than Coles at the end of March.

JP Morgan has tipped Woolworths' same-store sales to grow by 0.9 per cent in the third quarter, compared with 1.2 per cent the previous quarter.

By contrast, it forecast Coles to report 4.3 per cent growth in same-store sales for the third quarter this week.

Supermarket sales grew by 3 per cent year on year in January, and 4.4 per cent year on year in February, according to official figures. Inflation for food and non-alcoholic drinks for the March quarter grew by 1.9 per cent.