Ocado Group PLC (LSE:OCDO) has begun the year by slashing prices, something investors had been doing in the past few years but took a break in the second half of 2023.
From pandemic peaks close to £28 on hopes that lockdown trends for home shopping might stick, the shares plunged over 80% to below £4 by last June, the lowest in six years.
However, spurious bid reports, a legal win and a move outside of its grocery specialization have all combined to help lift the shares since, ending the year above £7 but sinking below that level ahead of a trading update from the company's Ocado Retail joint venture with Marks and Spencer Group PLC (LSE:MKS) in the coming week.
Ocado Retail this week announced a new round of price cuts on hundreds more products, the fifth since last June, which it claims has led to it reducing prices on more than 3,000 products in the past six months, aiming to price match products on more than 10,000 goods with Tesco.
A year-end update for Ocado Retail will be released on 16 January, a week after part-owner M&S reported 9.9% underlying grocery sales growth for the 13 weeks ended 30 December.
M&S was a big Christmas winner, says broker Peel Hunt, so "it will be interesting to see how Ocado Retail has performed alongside it".
Analysts added that "it is clear" that M&S is likely to buy the 50% of the JV from Ocado when the time comes, but language used recently had reflected that this is "a multi-year turnaround story".
As this update covers the retail branch of Ocado, it will not have any information on the key value driver for Ocado Group PLC (LSE:OCDO), which is the Technology Solutions division.
"Therefore, we believe investors should not place too much weight on these results vs Ocado Group’s full-year trading update," said Peel Hunt.
Final results from Ocado, including Tech Solutions, are scheduled for 29 February.