Ocado loss widens to £500m; home sellers slash asking prices – business live

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Key events

Full story: UK home sellers having to cut average of £14,000 from asking price

Rupert Jones

Although UK home sellers are shaving an average of £14,000 off the original asking price, separate research from Halifax today has highlighted the sizeable house price gains made by millions of homeowners during the past three years.

Halifax’s data showed that the average UK house price went up by 20.4% – or £48,620 – between January 2020 and December 2022, climbing from £237,895 to £286,515.

Owners of larger homes have been the big winners from the pandemic-fuelled “race for space”, while London flat owners have gained the least.

My colleague Rupert Jones explains:

According to the 2020-22 data, the average price for bigger homes grew at almost twice the rate than for smaller properties. When the UK housing market first reopened after months of Covid lockdown, there was an increase in demand for larger homes as buyers sought more space, a garden or better environments for working from home.

As a result, the average price of a detached home soared by 25.9% between the start of 2020 and the end of 2022.

Here’s the full story:

Introduction: Ocado's annual loss swells to £500m

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Ocado, the online grocery and technology firm, has posted a £500m loss for last year as the cost of living crisis hits spending.

2022 was “a challenging year for Ocado Retail”, the company tells shareholders this morning, reporting that pre-tax losses widened to £500.8m for last year, up from £176.9m in 2021.

That compared to analysts’ average forecast of a loss of 399 million pounds, Reuters reports.

Revenues at Ocado Retail, its joint venture with Marks & Spencer, fell by 3.8% during the year, despite the company reporting record sales over Christmas.

Ocado Retail did swell its customer base, though – active customers increased by 13% to 940,000.

One challenge is that Ocado Retail customers are putting fewer items in their baskets in response to higher prices and the cost of living crisis.

Soaring costs, and the unwinding of the spending boost during pandemic lockdowns, are also biting.

Tim Steiner, Ocado’s CEO, says every company has had its business model tested by a combination of macro-economic and geopolitical headwinds. Ocado has “more confidence” in its model than ever before, he declares.

Steiner tells the City:

Ocado Retail, our UK JV with M&S, has shown its resilience against a backdrop of higher costs and smaller baskets, reflecting the Covid unwind and the UK cost of living crisis, by growing customer numbers and increasing online market share.

As the Covid unwind fades and customer growth continues the business will start to recover the fixed costs of recent capacity commitments.

Ocado’s business also builds robots and software for online grocery deliveries.

The company says that its partners have reported “leading customer satisfaction metrics” and growth ahead of the broader online channel in their respective markets.

Also coming up today

As the UK housing market cools, home sellers are accepting an average discount of 4.5% off their asking prices to find a buyer, property website Zoopla reports this morning.

The average property price in the UK is now £260,800, Zoopla said, which means sellers are taking a cut of £14,100.

It is the highest gap between the asking price and sale price for five years, according to Zoopla, and follows several months of falling house prices.

“The average discount to asking price was 4.5% this month, the biggest discount in more than five years and up from 0.4% in 2022, according to Zoopla”

(via bbg) pic.twitter.com/u7nJ5jf3Sn

— Michael Brown (@MrMBrown) February 28, 2023

But, the surge in house prices since the start of the pandemic means sellers have flexibility to accept lower offers, as Richard Donnell, executive director at Zoopla, explains:

“Greater realism on the part of sellers is supporting housing market activity in the face of higher borrowing costs.

Many homeowners are sitting on sizable house price gains made over recent years and have more room to be flexible accepting offers below the asking price. Discounts to asking price have widened and while 4-5% discounts are manageable, if these were to widen further then this would point to a greater likelihood of larger house price falls.

We believe the market remains on track for a soft landing in 2023 with modest price falls of up to 5% and one million housing sales.”

Investors will be watching Westminster, where MPs are scrutinising Rishi Sunak’s new Northern Ireland Brexit deal.

The pound has dipped a little this morning, to $1.294, having gained ground yesterday as the “Windsor framework” was revealed.

Businesses have been welcoming the deal, which should make it easier to import goods from Great Britain into Northern Ireland.

Andrew Lynas, the managing director of Lynas Foodservice, told us:

The uncertainty was the biggest challenge. So this is good progress.”

European stock markets are set to inch higher on the final day of February, its second ‘up month’ in a row.

The FTSE 100 index is expected to open flat, though, having gained 0.75% to 7935 points on Monday.

Michael Hewson of CMC Markets says:

As we come to the end of what looks set to be another positive month for European equities the question being posed is how much further can this year’s rally take us, with the DAX currently up over 10.5% year to date, and the FTSE100 up almost 6.5%?