Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a885509

Amazon primes Morrisons but hurts Ocado with UK expansion

Morrisons jumps but Ocado dives after supermarket strikes distribution deal with Amazon. FTSE recovers from early fall.

 
Amazon primes Morrisons but hurts Ocado with UK expansion

Morrison (MRW) shares jumped nearly 6% after the country’s fourth largest supermarket sealed a distribution deal with Amazon (AMZN.O), the US e-commerce giant.

The alliance marks an expansion of Amazon’s ‘Pantry’ service which it launched in the UK last year. It will give its Prime Now and Pantry customers access to the food products in Morrisons’ stores.

Morrisons’ chief executive David Potts said it was a ‘compelling’ partnership. ‘This is a low risk and capital light wholesale supply arrangement that demonstrates the opportunity we have to become a broader business.’

Morrisons’ shares gained 11p to 196.6p, making them one of the top ‘mid cap’ risers on the FTSE 250 index. They have risen a third during the bounce back in supermarket shares since the start of the year.

The news hurt Ocado (OCDO), the grocery distribution group behind morrisons.com, the online service launched by the supermarket last year. Its shares dived nearly 8%, or 22p, to 260p despite Morrisons announcing an agreement to  expand the service.

Jonathan Buxton, partner at Cavendish Corporate Finance, said the sliding share price showed the 'significant concern at how the home-grown online grocer will be able to compete with the might of Amazon.' 

Fears that Amazon’s expansion would intensify competition among retailers move hurt rivals. Tesco (TSCO) slid 2% or 3.75p at 179p, as it denied weekend reports that it was preparing a further round of big job cuts. Its shares have risen nearly 20% since 1 January.

Sainsburys (SBRY) traded lower before moving to add 1.6p at 251.8p.

Stock markets over came early pressure following the failure of G20 leaders in Shanghai to announce measures to boost the global economy.

The FTSE 100 shed 58 points or nearly 1% in the morning but reversed this to close a point up at 6,097.

Financial stocks bore the brunt of investors’ worries with London Stock Exchange (LSE) shedding 4.9% to £26.78, losing some of the gains after last week’s announcement of merger talks with Deutsche Borse.

HSBC Holdings (HSBA) dropped nearly 1.6% to 460p as analysts at Bernstein cut their rating to ‘underperform’ and trimmed their price target following last week's annual results.

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: The sterling slump: what’s next?


After Boris announced he was backing Brexit, sterling suffered its biggest slump in six years. Our Market Mavens discuss. Follow the Market Mavens LinkedIn page for weekly videos, in which our panel of industry experts share their views on financial news

The Citywire guide to investment trusts

In association with Aberdeen Asset Management

More about this:

Look up the shares

  • WM Morrison Supermarkets PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Tesco PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • J Sainsbury PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Ocado Group PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • London Stock Exchange Group PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • HSBC Holdings PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Standard Chartered PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Randgold Resources Ltd
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Anglo American PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Sorry, this link is not
quite ready yet