Ocado faces relegation from London’s top stocks after share price crash
Online grocery retailer Ocado Group is set to lose its place among London’s top stocks after struggling with a price drop and cutbacks from buyers.
According to indicative data from FTSE Russell, the company is expected to exit the FTSE 100 in favor of a position in the FTSE 250.
A difficult period follows for the group, which has food technology including robotics and has sites around the world, with losses stretching to over £500m in 2022.
Energy Secretary Grant Shapps, the local MP for Welwyn Hatfield, said he was “shocked” after Ocado announced plans to close its oldest distribution center in Hatfield, affecting around 2,300 workers.
Instead, the plan is to move orders to a new, state-of-the-art automated warehouse in Luton, due to open this autumn.
The falling share price also shows that investors are losing patience with Ocado Solutions, which is expected to be the company’s driving force over the long term
Meanwhile, the company’s retail arm, which is run as a joint venture with retail giant Marks & Spencer, also posted an underlying loss of £4million in the last financial year.
The retailer has seen a boost during the Covid pandemic as lockdown households flocked to online supermarket shopping.
However, it turns out that over the past year, shoppers had responded to the increased grocery prices by putting fewer items in their shopping baskets.
Analysts stressed that since restrictions were eased, shoppers have also returned to supermarkets.
Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, said: “The size of shopping baskets has shrunk at Ocado and retailers are unable to capitalize on the renewed demand for physical store purchases.”
“But the falling share price also shows that investors are losing patience with Ocado Solutions, which is expected to be the company’s driving force over the long term. However, the demand for robotic technology for warehouses remains weaker than hoped and fewer deals are generated than expected.” .”
Ocado’s share price has fallen by more than a third in the past six months and by more than half over the past year.
Meanwhile, Ocado’s place in the UK’s top index is likely to be taken by Birmingham-based engineering firm IMI, formerly Imperial Metal Industries.
The company has seen its share price rise more than 20% year-to-date and raised its full-year earnings guidance after a strong performance in the first quarter.
Also in the zone is outsourcing company Capita, which could move up from the FTSE small cap to the FTSE 250.
“The share price rose sharply in March after the turnaround strategy appeared to be bearing fruit,” Ms. Streeter said.
“The data breach at the company following a cyber attack, which is still under investigation, has shaken some confidence.
“But shares are still up nearly a quarter year-to-date, easing its re-entry into the FTSE 250, which the company was demoted from in March 2022.”
The FTSE reshuffle will be based on data as of Tuesday’s close, with changes confirmed after Wednesday’s close.
https://www.standard.co.uk/business/business-news/ocado-facing-relegation-from-london-s-top-stocks-after-share-price-slump-b1083965.html Ocado faces relegation from London’s top stocks after share price crash
