Directors’ Deals: Ocado directors snap up cut-price shares

Two directors recently took the opportunity to purchase shares in Ocado, after they sank to their lowest value since 2018. Non-executive chair Rick Haythornthwaite bought £100,000 of shares, and Ocado Technology chief executive James Matthews followed suit with a purchase worth almost £88,000. 

Shares in the “grocery disruptor” have fallen by 48 per cent so far this year and are now worth less than a third of their peak.

In March, the loss-making firm said a “return to pre-Covid shopping patterns” contributed to falling sales in the first quarter of 2022. Though customer numbers rose by nearly a third year-on-year, the average basket value fell by 15 per cent to £124.

Ocado was already on a downward trend thanks to a broad tech sell-off at the start of the year. Multiple lawsuits in the US and UK between Ocado and its warehousing tech rival Autostore over patents did not help matters, and although Ocado won its US trade case in March, Autostore’s stated intention to appeal against the decision suggests the battle is not yet over.

At the same time, there are questions over Ocado’s long-term plan for profitability, which involves selling its technology to grocery partners. Deals with Kroger and Casino Groupe are already under way, but analysts expect these expensive projects will require Ocado to raise more debt in 2022 or 2023.

While there was no company news triggering Haythornthwaite and Matthews’ transactions, the buys could be restoring some confidence in Ocado’s valuation. Shares ticked up by 2 per cent in the week ending May 13, suggesting a small improvement in sentiment. Nevertheless, hot sector competition coupled with waning enthusiasm for online deliveries means it could be a while before Ocado is out of the woods.