Ocado shares sank on Tuesday as the online retailer had their rating cut by analysts at HSBC. HSBC cut their rating on Ocado from hold to reduce, sending the Ocado share price down by over 7% in early trade.
Ocado recently said they see costs weighing on profitability for Ocado Retail Q4 2022, despite growing customer numbers.
Ocado Retail is joint venture between Ocado and Marks & Spencer recording Q3 sales of £532m, up 2.7% on the year prior and well ahead of pre-pandemic levels.
Although they noted high customer numbers, customer’s baskets were smaller as shoppers sought out bargains, a problem for Ocado and their positioning towards the higher end of the market.
“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 Tim Steiner, Chairman of Ocado Retail.
“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.”