Ocado Share News (OCDO)

The outlook for profits across the UK grocery sector is 'highly constrained', according to Shore Capital, which raised concerns about rising pricing contagion.The broker has retained its 'sell' ratings for supermarket rivals Tesco and WM Morrison and online grocer Ocado."We have harboured growing concerns about the scope for price cutting to gain ground in recent months, so potentially debilitating supermarkets' gross margins in what are demonstrably weak markets in terms of demand in the UK," said analysts Clive Black and Darren Shirley. "That weak demand from economic pressure on household budgets is exacerbated by processes such as ongoing management of food waste, the desire to shop more frequently and locally, a step up in eating out and channel shift online, especially in non-food."They highlighted moves by some of the major players in the industry over the last month to cut prices on certain products, such as milk, butter and eggs.Shore has kept a cautious stance on the sector, saying that without strengthening demand and a stabilisation of the pricing environment, "the earnings outlook for UK-listed supermarkets appears highly constrained".Tesco was trading 1.1% lower on Tuesday morning, Morrison was down 1%, while Ocado had fallen 3.7%.BC