John Lewis sale hits Ocado shares

John Lewis offloaded the shares for around £152 million or 265p each, 7% lower than the price last night and sending the stock down by 17% today.

Ocado said the sale did not impact its commercial relationship with John Lewis-owned supermarket Waitrose, having signed a new 10-year delivery deal in May last year. John Lewis said the move was part of its pension fund review process.

It had already sold half its previous stake at the time of Ocado’s stock market flotation last July, but was restricted from selling the remainder until Ocado’s recent full-year results.

The shares tumble follows a recent strong run for Ocado, with persistent takeover rumours helping the stock recover strongly after a shaky start to life as a public company.

It was forced to slash its float price to 180p on concerns over valuation, and then languished in the red, slipping to as low as 120.9p in October.

But shares climbed as high as 290p during trading yesterday.

Retail analyst Nick Bubb said the John Lewis sale has “tested the appetite” for the stock.

There are fears the stake sale will pave the way for Waitrose to compete harder in London with Ocado, having just started its own rival delivery operation within the M25.

“But we think this is a red herring and Ocado has been quick to point out that its commercial relationship with Waitrose won’t be affected by the decision of the John Lewis pension fund to bank its profits,” added Mr Bubb.

The sale is also seen as a positive for Ocado in the long-run, as it will free up its shareholder base, which had seen 10 investors hold around 80% of the equity. But it is unclear who the shares have been sold to at this stage.