Ocado facing relegation from London’s top stocks after share price slump

It follows a difficult patch for the group, which owns grocery technology including robotics and has sites around the world, with losses widening to more than £500 million over 2022.

Energy Secretary Grant Shapps, who is the local MP for Welwyn Hatfield, said he was “shocked” after Ocado announced plans to shut its oldest distribution centre in Hatfield, affecting around 2,300 workers.

It plans instead to shift orders to a new state-of-the-art automated warehouse in Luton, due to open this autumn.

Meanwhile, the retail side of the business, which is run as a joint venture with high street giant Marks & Spencer, also swung to an underlying loss of £4m over the latest financial year.

The retailer was buoyed during the Covid pandemic when locked-down households flocked to online supermarket shopping.

But it revealed its customers had been responding to higher food prices over the past year by putting fewer items in their baskets.

Shoppers have also returned to high street supermarkets since restrictions eased, analysts pointed out.

Susannah Streeter, head of money and markets for Hargreaves Lansdown, said: “Shopping basket sizes have been shrinking at Ocado and the retail side of the business can’t benefit from the surge in demand to shop in bricks and mortar stores once more.

“But the falling share price also demonstrates that investors are losing patience with Ocado Solutions, which is mean to be the long-term powerhouse of the company, but demand for robotic technology for warehouses remains weaker than hoped, with fewer deals than expected coming through.”

Ocado’s share price has slumped by more than a third over the past six months, and by more than half over the past year.

Meanwhile, Ocado’s spot on the UK’s top index is set to be grabbed by Birmingham-based engineering firm IMI, formerly Imperial Metal Industries.

The company has seen its share price surge by more than 20 per cent over the year-to-date and it lifted its full year earnings expectations after a strong first-quarter performance.

Also in the promotion zone is outsourcing firm Capita, which could elevate from the FTSE Small Cap into the FTSE 250.

“Its share price rose sharply in March after its turnaround strategy appeared to be bearing fruit”, Ms Streeter said.

“The data breach at the company following a cyber-attack, which is still being investigated, has knocked some confidence.

“But shares have still risen by almost a quarter since the start of the year, easing its passage back into the FTSE 250 which it was relegated from in March 2022.”

The FTSE reshuffle will be based on data at market close on Tuesday, with the changes confirmed after markets close on Wednesday.