MARKET REPORT: Ocado shares tumble as Covid boom turns to bust

The so-called pandemic winners are quickly turning into post-Covid losers, none more so than Ocado.

The grocery delivery driver had a great time during the lockdowns. Customers sat at home, with hefty piggy banks on the couch, splashing money on home delivery.

But reality has set in quickly and while some may not have returned to the office every day, they have returned to supermarkets and restaurants.

Ocado’s affluent shoppers also find themselves poorer as inflation hovers around the double digits and they battle rising mortgage and energy costs.

As a result, Ocado posted its first ever decline in annual grocery sales last year as customers spend less and order less from the company.

Dismal numbers from Ocado’s retail arm – a joint venture with Marks & Spencer’s food hall – showed a 3.8 per cent drop in sales to £3.3 billion by 2022.

In Ocado’s final quarter – September to November – the average value of customer orders was £117, down 1.3 percent from the previous year as basket volumes fell 8.3 percent.

The only bright spot for investors was the start of 2023 trading in December. Festive food and English sparkling wine have boosted sales by 15 percent in the last five days before Christmas.

Chief executive Hannah Gibson said: ‘Around this time last year we were still in Covid, we still had a lot of people at home and most of their consumption was in online shopping. What we’re going to see this year is a drop in baskets.”

Analysts believe Ocado will have a hard time turning around performance as shoppers look to save money and turn to cheaper rivals like Aldi and Lidl.

Ocado isn’t the only company to see a turnaround since the pandemic. Takeaway delivery group Deliveroo (-1.9 percent, or 1.76p, to 90.04p) and online card and gift retailer Moonpig (-0.6 percent, or 0.7p, to 116.7p) are also struggling.

And last week the Scottish Mortgage Investment Trust (0.03 percent, or 0.2 pence, to 779.2 pence) admitted it had made a ‘mistake’ in assuming consumer changes during Covid would be long-lasting. are.

Ocado shares fell 9.3 percent, or 75 pence, to 733 pence. M&S, meanwhile, gained 0.5 percent, or 0.8 pence, to 150.9 pence.

There was little reason for investors to cheer as the FTSE 100 fell 0.1 percent, or 9.04 points, to 7851.03.

The main index has been held back by weak Chinese growth numbers, though investors are still hoping the Footsie can break through 7877.45 and close at an all-time high this week.

On the FTSE 250 (-0.7 percent, or 134.29 points, to 19948.04), Tui soared after saying it wanted to find a shareholder to replace Russian billionaire Alexey Mordashov.

He is the largest investor in the holiday company with a stake of 31 percent, but his sanction by the European Union has caused reputational damage for the travel company.

In the coming months, the company could try to issue more shares and water down Mordashov’s ownership, according to brokers.

Tui shares gained 4.3 per cent, or 7.6p, to 183.55p.

Not far behind was the recruitment company Hays, which recorded an 8 percent increase in the fourth quarter after a record November.

Shares rose 2.1 percent, or 2.5 pence, to 121.5 pence just a week after a tentative update from rival Robert Walters (3.3 percent, or 17 pence, to 493 pence).

But it was a day to forget for Wise, formerly Transferwise. The value of cross-border transfers fell to £26.4bn in the last three months of 2022, the first drop in more than a year and down 2% from the last quarter.

Shares fell 10.3 percent, or 66.2 pence, to 575 pence.

Among the small caps, there was little cheer for Naked Wines, which said it expected sales to decline in the coming year. Shares fell 3.8 percent, or 5.2 pence, to 132.3 pence.