Order backlog puts brakes on Ocado
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.