Ocado shares tumble as Covid boom turns to bust
The so-called pandemic winners are fast turning into post-Covid losers, and none more than Ocado.
The grocery delivery firm had a belter of a time during lockdowns. Customers sat at home, with hefty savings pots in the bank, splashing money on home deliveries.
But reality has quickly set in and while some may not have returned to the office every day, they have gone back to supermarkets and restaurants. Ocado’s well-heeled shoppers also find themselves poorer as inflation hovers around double digits and they battle rising mortgage and energy costs.
As a result, Ocado recorded its first ever fall in annual grocery sales last year as shoppers spent, and ordered less, from the company.
The dismal figures from Ocado’s retail arm – a joint venture with Marks & Spencer’s food hall – showed a 3.8pc fall in revenue to £3.3bn in 2022.
In Ocado’s final quarter – September to November – the average value of customers’ orders was £117, a drop of 1.3pc compared to the year before as basket volumes fell by 8.3pc. The only bright spot for investors was the start to 2023 trading in December. Party food and english sparkling wine pushed up sales by 15pc in the last five days before Christmas.
Chief executive hannah Gibson said: ‘This time last year we were still in Covid, we still had many people at home and the majority of their consuming was being done in online groceries. What we’re going to see into this year is a decline in baskets.’
Analysts believe Ocado will have a tough time turning the performance around as shoppers look to save money and head to cheaper rivals like Aldi and Lidl.
Ocado is not the only business to see a reversal of fortunes since the pandemic. Takeaway delivery group Deliveroo (down 1.9pc, or 1.76p, to 90.04p) and online card and gifts retailer Moonpig (down 0.6pc, or 0.7p, to 116.7p) are also struggling. And last week Scottish Mortgage Investment Trust (down 0.03pc, or 0.2p, to 779.2p) admitted it had made ‘a mistake’ to assume consumer changes during Covid would be long lasting.
Ocado shares dropped 9.3pc, or 75p, to 733p. M&S, meanwhile, gained 0.5pc, or 0.8p, to 150.9p.
There was little for investors to cheer as the FTSE 100 slid 0.1pc, or 9.04 points, to 7851.03.
The premier index was held back by weak China growth data, although investors will still be hoping the Footsie can breakthrough 7877.45 and close at a record high this week.
On the FTSE 250 (down 0.7pc, or 134.29 points, to 19948.04), Tui soared after saying it wanted to find a shareholder to replace the Russian billionaire Alexey Mordashov. he is the holiday company’s largest investor with a 31pc stake but his sanctioning by the european Union has caused reputational damage for the travel company. According to brokers, the company could look to issue more stock and dilute Mordashov’s ownership over the coming months.
Tui shares gained 4.3pc, or 7.6p, to 183.55p.
Not far behind was recruitment firm Hays, which notched up an 8pc rise in fees in the fourth quarter following a record November. Shares rose 2.1pc, or 2.5p, to 121.5p just a week after a cautious update from rival Robert Walters (down 3.3pc, or 17p, to 493p).
But it was a day to forget for Wise, formerly Transferwise. The value of cross-border transfers fell to £26.4bn in the final three months of 2022, its first decline in more than a year and 2pc down on the last quarter. Shares fell 10.3pc, or 66.2p, to 575p.
Among the small caps, there was little cheer for Naked Wines which said it expects sales to decline in the year ahead. Shares fell 3.8pc, or 5.2p, to 132.3p.