Retail tech group Ocado is looking to settle City jitters over sluggish demand this week as it updates the City following a bruising nine months trading.
Ocado will offer a trading statement to the market on Tuesday after slumping to a hefty loss in the first half of the year.
In its latest update to the City in July, the supermarket tech specialist said pre-tax losses had widened to £289m despite its retail arm – a joint venture with M&S – growing five per cent to £1.17bn and returning to profitability during the second quarter.
Middle-class favourite Ocado made hay through the pandemic as shoppers turned to grocery delivery through lockdowns, but has struggled this year amid a cost of living crunch.
Analysts said investors will be watching its update keenly on Tuesday to see if it has made progress in boosting sales even as customers rein in spending.
“While Ocado is doing what it can, grocery inflation is rife, and customers are tightening their belts,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
“Ocado isn’t a discount name, making it tough to compete in the current environment. The group’s still just about able to attract new customers, but people are buying less on average and the group’s undertaking price cuts.
“That’s a painful development for margins and, next week, they should give some further colour on how demand is shaping up.”
Ocado has suffered a rocky year on the public markets with shares trading up 16 per cent over the year to date but shedding nearly 20 per cent of their value since July.
The firm is trading down over 70 per cent from its pandemic peak in September 2020, narrowly dodging relegation from the FTSE 100 this year after a timely bump in its share price.
Ocado’s cratering valuation has attracted the interest of short sellers. According to the FCA’s register of short positions, some 3.6 per cent of its stock is held short, meaning investors stand to reap profits when its share price falls.
The firm became the most shorted position on the London Stock Exchange earlier this year after its annual losses ballooned to £500m last year.
Analysts are pricing in a loss of £407m this year, according to a company-compiled consensus.