MARKET REPORT: 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. 

Slump: Grocery delivery firm Ocado had a belter of a time during lockdowns bust is suffering as customers return 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 3.8 per cent fall in revenue to £3.3billion in 2022.

In Ocado’s final quarter – September to November – the average value of customers’ orders was £117, a drop of 1.3 per cent compared to the year before as basket volumes fell by 8.3 per cent. 

The only bright spot for investors was the start to 2023 trading in December. Party food and English sparkling wine pushed up sales by 15 per cent 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.

Stock Watch – Crest Nicholson

More signs of a slowdown in the housing market have been visible at Crest Nicholson sites in recent months as high mortgage rates put pressure on new buyers.

Crest said the number of homes it sold at each of its sites fell to 0.6 per week in the year to the end of October from 0.8 the year before.

But since then, things have slowed down even further. In the 11 weeks since the start of November, sales per outlet per week were 0.35. Shares fell 6.4 per cent, or 17p, to 248.6p.

Ocado is not the only business to see a reversal of fortunes since the pandemic. Takeaway delivery group Deliveroo (down 1.9 per cent, or 1.76p, to 90.04p) and online card and gifts retailer Moonpig (down 0.6 per cent, or 0.7p, to 116.7p) are also struggling. 

And last week Scottish Mortgage Investment Trust (down 0.03 per cent, 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 9.3 per cent, or 75p, to 733p. M&S, meanwhile, gained 0.5 per cent, or 0.8p, to 150.9p.

There was little for investors to cheer as the FTSE 100 slid 0.1 per cent, 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 0.7 per cent, 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 31 per cent 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 4.3 per cent, or 7.6p, to 183.55p.

Not far behind was recruitment firm Hays, which notched up an 8 per cent rise in fees in the fourth quarter following a record November. 

Shares rose 2.1 per cent, or 2.5p, to 121.5p just a week after a cautious update from rival Robert Walters (down 3.3 per cent, or 17p, to 493p).

But it was a day to forget for Wise, formerly Transferwise. The value of cross-border transfers fell to £26.4billion in the final three months of 2022, its first decline in more than a year and 2 per cent down on the last quarter. 

Shares fell 10.3 per cent, 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 3.8 per cent, or 5.2p, to 132.3p.

This post first appeared on Dailymail.co.uk