Ocado shares sink after HSBC downgrade
Shares in Ocado sank on Tuesday after HSBC analysts downgraded the grocery delivery firm from a Hold to a Reduce rating.
HSCB’s notes caused shares in the middle-class favourite to drop by more than eight per cent after Ocado warned last week that soaring inflation will weigh on its profitability in Q4.
The firm warned the UK’s cost-of-living crisis could dent profits from its Ocado Retail joint venture with Marks & Spencer’s – even as its customer base continues to grow.
The grocery seller said that customers are reducing the size of their baskets and seeking out cheaper items during their shops, as they “respond to inflationary pressures”.
The situation has seen the value of an average basket drop six per cent over the previous quarter, to average sums of £116.
Ocado said soaring energy prices and CO2 prices will likely also weigh on the firm’s profitability in the final quarter of 2022.
Ocado 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”.