Or­der back­log puts brakes on Ocado

The Daily Telegraph - Business - - Business - louis ash­worth

A CLOGGED or­der back­log has forced Ocado to tem­po­rar­ily halt de­liv­er­ies to its own staff mem­bers, send­ing the group’s shares down 152p to £23.72.

The FTSE 100 de­liv­ery group – the best-per­form­ing stock among Lon­don’s blue-chips this year – said it had ex­pe­ri­enced a “surge in de­mand” fol­low­ing its tie-up with high street stal­wart Marks & Spencer, end­ing a pre­vi­ous agree­ment with Waitrose.

Cus­tomers ex­pressed dis­ap­point­ment with Ocado on Tues­day af­ter many had or­ders can­celled at the last minute, as the group strug­gled to deal with high de­mand. The busi­ness apol­o­gised at the time and said most or­ders had been ful­filled.

M&S shares were com­par­a­tively un­moved, with Citi an­a­lyst Adam Cochrane say­ing a “dif­fi­cult pe­riod for tran­si­tion” due to coro­n­avirus does not im­pinge on the “longer-term strate­gic ra­tio­nale” be­hind the two groups’ part­ner­ship.

The drop left Ocado as one of the FTSE 100’s worst per­form­ers dur­ing a ses­sion that turned ugly towards the end. Af­ter spend­ing most of the day in the green, Euro­pean eq­ui­ties flipped and closed sharply lower amid a heavy tech sell-off at the start of trad­ing on Wall Street.

Melrose was the blue-chip in­dex’s big­gest riser, jump­ing 12.7p to 113.2p af­ter half-year re­sults. The in­dus­trial turn­around spe­cial­ist’s prof­its sank deeper into the red as coro­n­avirus bat­tered the global au­to­mo­tive and avi­a­tion sec­tors. Its div­i­dend has been scrapped, with man­age­ment say­ing it was “not ap­pro­pri­ate” to make a pay­out at this point. But an­a­lysts pointed towards signs of im­prove­ment in its trad­ing and in­di­ca­tions that its cost-sav­ing ef­forts are tak­ing shape.

Travel stocks climbed across the board on vac­cine hopes, with Bri­tish Air­ways owner IAG ris­ing 12.9p to 215.8p, and SSP – which owns food out­lets such as Up­per Crust – gain­ing 18.4p at 259.4p to lead mid-cap ris­ers.

Car­ni­val was one of the big­gest ris­ers on the FTSE 250, up 68p to £10.94, af­ter an­nounc­ing two of its sub­sidiaries – Italy’s Costa Cruises and Ger­many’s Aida – would both re­sume sail­ing op­er­a­tions at the start of Novem­ber.

The com­pa­nies will re­sume op­er­a­tions in a phased fash­ion, with six ships op­er­at­ing lim­ited itin­er­ar­ies. The ships will have re­duced pas­sen­ger ca­pac­i­ties and in­creased health mea­sures.

Shares in Irn-Bru maker AG Barr dropped sharply, the day af­ter its pend­ing rel­e­ga­tion from the FTSE 250 was con­firmed. Bar­clays cut its rat­ing on the group to a low of 310p, with an­a­lyst Ewan Mitchell not­ing the loss of its con­tract with en­ergy drinks firm Rock­star would have a neg­a­tive ef­fect. AG Barr shares fell 37p to 383p.

Com­puta­cen­ter also dived 176p to £20.74, shav­ing off a chunk of Wednesday’s post-re­sults gains.

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