// Shares slip at online supermarket Ocado after it was downgraded to ‘reduce’ from ‘hold’ at HSBC
// The business said soaring energy prices and CO2 prices will weigh on its profitability in the final quarter of the year
Ocado shares sank on Tuesday as the online grocery retailer had their rating downgraded by analysts at HSBC from hold to reduce, sending the Ocado share price down by over 7%.
Last week the business cut its outlook despite its rising sales after the cost-of-living crisis led to shoppers seeking more value online and warned that soaring inflation will weigh on its profitability in Q4.
The firm warned the current economic state of the UK could dent profits from its Ocado Retail, its joint venture with Marks & Spencer – despite recording Q3 sales of £532m, up 2.7% on the year prior and well ahead of pre-pandemic levels.
Subscribe to Retail Gazette for free
Sign up here to get the latest news straight into your inbox each morning
Although they noted high customer numbers, customer baskets were smaller as they “respond to inflationary pressures”.
Ocado said soaring energy prices and CO2 prices will likely also weigh on the firm’s profitability in the final quarter of 2022.
Ocado Retail chairman Tim Steiner said the firm remains focused on providing customers “with the best possible value to help them navigate the cost-of-living crisis”.
“Our online grocery model, which creates efficiency through advanced technology, offers customers a combination of competitive prices, the widest ranges, and industry-leading service,” said Steiner.
“As we have seen in Q3, customer numbers are sharply up as consumers either switch from other providers or try online grocery for the first time; underlying productivity in fulfilment and the last mile continues to improve; and the new CEO of Ocado Retail, Hannah Gibson, brings fresh vision and energy to the business.
As consumer spending stabilises, we expect Ocado Retail will again deliver attractive and accelerating growth in sales and a strong recovery in profitability.”
Click here to sign up to Retail Gazette‘s free daily email newsletter
Source link >