Ocado slumps on M&S venture’s weak sales

Bloomberg

Ocado Group Plc shares approached a two-year low after its online grocery joint venture with Marks & Spencer Group Plc warned that revenue may grow less than expected amid rising energy costs.
Ocado Retail, as the venture is called, said it’s starting to cut costs across the business after first-quarter sales dropped 5.7%. Ocado shares fell as much as 9.4%.
Customers are returning to pre-pandemic shopping habits, heading back to offices and requiring fewer groceries, Ocado Retail said. While the pandemic has given a huge boost to most online retail businesses, Ocado has been missing out on the boom because of capacity constraints. The company has lost almost half its market value over the past year because it’s struggling to keep up with demand.
Rising food prices and cost of living increases are also weighing on the outlook, Ocado Group CEO Tim Steiner told reporters. Cost-cutting measures may include restraining growth in headcount, he said. Revenue growth, previously expected to be in the “mid-teens,” will likely be closer to 10% for the full year, the company said.