Ocado Group has clung on to its prized spot in the FTSE 100 ranking, despite a sharp fall in the value of its shares since the heights of the pandemic.
Last week, analysts noted that the market value of the online grocer and tech firm had fallen so much in the last year it was likely to slip into the FTSE 250 at the next reshuffle by the London Stock Exchange.
Ocado posted a half-a-billion loss last year after it saw revenues in its retail division fall as shoppers returned to stores following the pandemic and made cut backs amid the cost of living crisis. Shares in the firm have fallen over 75% since the end of 2021, after soaring previously as strong online demand during the Covid crisis and technology deals with overseas retailers boosted the firm’s credentials.
The FTSE 100 index features the 100 most highly capitalised companies whose shares are traded in London. It is rebalanced four times a year by relegating any company that has fallen below 110th position on the London market.
Ocado had been vulnerable to ejection from the prestigious ranking, but a pickup in its share price last week helped it to hold its position. The slight improvement came after its delivery joint venture partner Marks & Spencer pleased investors with a better-than-expected yearly profit.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, commented: “Ocado was lifted up on the coattails of M&S resilience last week.
“Although their joint venture has been struggling, M&S has staged a slick recovery and still spies further potential with their partnership. This announcement gave Ocado’s share price a little bit more wind in its sails.”
NAM Implications:
- Demotion means higher interest rates on borrowing.
- And more difficult raising of finance via rights issues.
- Therefore anticipate a little more pressure on suppliers in terms & conditions…
