Ocado drops to retail warning, FTSE 100 higher
Ocado’s stock market valuation continued to decline today as investors reacted to new guidance from its retail joint venture M&S.
Shares fell another 4% as Ocado Retail blamed cost-of-living pressures on an updated low-single-digit sales growth forecast, compared with about 10% previously.
FTSE 100 shares are now at 735p and are worth around £5.5bn after today’s 30p drop, having more than halved from 1,600p in January. Along with heightened consumer uncertainty, Ocado has been caught up in the broader dumping of technology and growth stocks.
Its valuation is based on longer-term prospects as Ocado closes deals for its grocery warehouse automation and fulfillment centers with global retailers like Kroger in the US and Casino in France.
But the original Ocado.com business, launched over 20 years ago and now a joint venture with M&S, accounted for 92% of the group’s £2.5bn revenue in 2021.
Today’s update revealed that the online grocery market has shrunk by 20% compared to the same period last year, but the market share is almost double what it was before the pandemic.
Ocado Retail’s heightened caution over trading conditions has done little to benefit the retail sector in general, with Sainsbury’s shares also falling 3.3p to 229p. The declines were more than offset by strength in commodity-related stocks as the FTSE 100 index continued its recent resilience, climbing a further 28.23 points to 7512.58.
BP rose 5.6 pence to 429.2 pence and Shell was up 14 pence to 2380 pence after Brent crude moved closer to $115 a barrel on expectations of stronger demand as American motorists eased prepare to hit the streets on Memorial Day weekend.
Other heavyweight stocks that offered support today were Glencore and Anglo American, whose shares rose more than 2%, up 14.4p to 533.8p and 92.5p to 3717p, respectively.
In a busy company earnings session, some investors struggled to get the latest figures due to technical issues with the regulatory news service’s feed.
One company whose message got across was FTSE 250-listed ventilation products company Volution, whose shares rose 6% after an unscheduled update, showing sales growth of 17% and an earnings forecast towards the higher end of City’s hopes.
Shares rose 23.5p to 379p in one session as the FTSE 250 rose 48.99 points to 19,898.81.
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