Ocado’s share price has dropped more than eight per cent since it released its fourth quarter results last week, despite reporting a 35 per cent rise in sales.
On Thursday Ocado Retail, the online grocer’s new joint venture with Marks & Spencer, raised its profit expectations for the full year again after seeing sales jump to £579.6 million over the 13 weeks to November 29.
While customers seemingly continued to flock to the retailer, seeing average orders grow by 10,000 per week, investors were less than impressed and its shares tumbled to levels not seen since August.
Shares hit a low of 2149p this morning, dropping 8.12 per cent since it released its results on Thursday, before recovering slightly to 2183p.
One potential reason for the share price decline was that Ocado’s average order size actually dropped from £141 in the previous quarter to £133, suggesting that customers’ shopping behaviours were beginning to “normalise”.
Capacity issues are also likely to have been a factor, with the upcoming Christmas rush likely to see a repeat of the issues Ocado faced at the start of lockdown leaving swathes of customers unable to access its overstretched service.
While Ocado said in its fourth quarter results it has plans to expand capacity by 40 per cent next year, the automated and costly nature of its logistics network makes expanding its delivery capabilities a much slower process than more traditional rivals like Sainsbury’s, which has doubled its capacity since March.
Elsewhere Ocado is embroiled in a legal dispute over its signature technology, which is fast becoming its main export as opposed to actual groceries.
Ocado is currently being sued by Norwegian tech firm AutoStore over claims it has infringed a number of its patents.
Last month, the US International Trade Commission (ITC) announced plans to open a formal investigation into Ocado which would prevent it bringing any robots or other key technology into the country.
This threatened its tie-up with Kroger, currently its largest corporate client, for which it is in the process of building 20 automated distribution centres across the US.
Despite this, Ocado’s share price is still up 80 per cent since the start of the year, and it continued to contend with Tesco for the title of the UK’s most valuable grocer despite being dramatically smaller.