Ocado suffers as John Lewis sells its stake

Just days after celebrating its first quarterly profit, shares in Ocado plunged as the John Lewis Partnership's pension fund sold its remaining stake in the online grocer.

The £152m disposal was handled by Goldman Sachs, which placed the stock with new and existing institutional shareholders at a price of 265p. The sell-off resulted in a sharp fall in Ocado's shares, which finished the day down 33.3p at 251.7p. They had been trading at close to all-time highs.

In a terse statement to the London Stock Exchange, Ocado insisted that the "the sale does not affect the existing commercial arrangements between Ocado and [John Lewis subsidiary] Waitrose". It added: "The sale is being undertaken by the John Lewis Partnership Pensions Trust as part of its investment management activities. Further announcements will be made in due course."

However, the move still sparked speculation that the two firms will in future have a far more distant and competitive relationship. Ocado recently signed a new sourcing arrangement with Waitrose which will last until 2017; the agreement also contains restrictions on the expansion of its own brand range.

The company – founded by three Goldman Sachs bankers – admits that its "reputation and brand is based, at least in part, on its relationship with Waitrose and John Lewis".

However, Waitrose also operates its own online store together with a click-and-collect service that enables its customers to buy online and then pick up their shopping in-store.

Online orders via Waitrose for delivery within the M25 currently have to be handled by Ocado, but that restriction comes to an end in June, although Waitrose is not particularly well represented in the London area, which is the heartland of Ocado's business.

Yesterday Mark Price, the managing director of Waitrose, said only: "We look forward to continuing our strong relationship with Ocado through our 10-year servicing agreement."

While the pension fund had long been expected to sell at least part of its stake after the expiry of a lock-in imposed at the time of the company's flotation in July, the fact that it has offloaded the entire 10 per cent in one go raised eyebrows in the City. Some even went as far as to suggest that it resulted from concerns about Ocado's long-term profitability.

Despite the profit in its final quarter, Waitrose still made a loss for the year as a whole. Nonetheless, its shares have soared recently, more than doubling in value from the 123p nadir they hit after the controversial flotation, when they were priced at 180p. The shares were transferred to the pension fund by John Lewis in November 2008 at 120p, meaning that the fund will benefit from a significant windfall.

Analysts said that although they were surprised that the pension fund had not retained even a small stake, they still expected the companies to hold a relatively close relationship, not least because the presence of either one of them in a market has typically facilitated growth for the other.

Sam Hart, retail analyst at Charles Stanley, said: "It's a slightly opportunistic move. The shares have been performing really quite strongly. You wonder if they [the John Lewis pension fund] might have some doubts about the long-term prospects of Ocado and its model."

Nick Bubb, a retail analyst at Arden Partners, said: "This has all been a bit of a saga. It was always expected that they would sell some of their stake after the results. But I'm a bit surprised they sold all of them.

"I would have expected them to keep at least a small stake.But Waitrose doesn't have many stores in London to do in-store pick-up and home delivery, for example. Both companies still need each other."

Sport
Luis Suarez and Lionel Messi during Barcelona training in August
footballPete Jenson co-ghost wrote Suarez’s autobiography and reveals how desperate he's been to return
News
newsMcKamey Manor says 'there is no escape until the tour is completed'
Voices
Hunted: A stag lies dead on Jura, where David Cameron holidays and has himself stalked deer
voicesThe Scotland I know is becoming a playground for the rich
News
people
PROMOTED VIDEO
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
newsSam Smith’s Mobo triumph is just the latest example of a trend
News
Laurence Easeman and Russell Brand
people
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
Fans of Dulwich Hamlet FC at their ground Champion Hill
footballFans are rejecting the £2,000 season tickets, officious stewarding, and airline-stadium sponsorship
News
Shami Chakrabarti
people
Arts and Entertainment
Benedict Cumberbatch has refused to deny his involvement in the upcoming new Star Wars film
filmBenedict Cumberbatch reignites Star Wars 7 rumours
Sport
football
News
news
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker