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Ocado Retail Ltd shares dropped on Tuesday (20 September) after analysts at HSBC downgraded the retailer’s rating from ‘hold’ to ‘reduce’, according to City A.M.
The lowered rating has sent Ocado’s share price down by over 7%, and this comes after Ocado lowered its FY22 outlook in a trading update last week (13 September).
Revenue growth in Q4 is not expected to generate full-year growth year-on-year as customers are buying smaller baskets and trading down in response to inflationary pressures.
Despite a “record” number of new customers who are now shopping at Ocado, the value of the average basket was down by 6% to £116 in the 13 weeks to 28 August 2022 (Q3), with a greater decline experienced later in the quarter during the peak summer holiday season.
The group now expects to see a small sales decline in FY22 and close to break-even EBITDA as customers are seeking value-for-money items.
Tim Steiner, chairman of Ocado Retail, said: “We remain focussed on providing Ocado Retail customers with the best possible value to help them navigate the cost of living crisis, and are encouraged by the positive underlying trends in the business which underline the value of Ocado’s differentiated proposition to customers.
“We are optimistic for the future even while recognising the challenges that higher energy bills and other inflationary pressures are creating for our customers today.”
