Ocado Share Discussion Threads

[whites123] 22/5/2024 07:27

From MKS Results:

As a reminder, results for Ocado Retail are reported by Ocado Group, and are not consolidated in this release. We believe the Ocado Retail model of automated fulfilment powered by Ocado technology, and M&S product, could be the most competitive model for online grocery sales in the UK. M&S Food has worked closely with Ocado Retail to reset the business and we are now seeing encouraging active customer and sales growth, although profitability is well below the original business plan and expectations. There is enormous opportunity to improve trust in value, website experience, logistics, and supply chain, which will be the focus for the next two to three years.

Market share of M&S sales in stores increased to 3.7% (from 3.6% in 2022/23) driven by growth in volume, larger baskets and across all demographics. Once M&S on Ocado is included, market share increases to 4.2% (from 4.0% in 2022/23).

OCADO RETAIL STARTING TO DELIVER IMPROVED REVENUE GROWTH

Results for Ocado Retail are reported by Ocado Group and are not consolidated in this release. M&S accounts for the joint venture as an associate interest.

Our vision for Ocado Retail remains to combine the magic of M&S Food with Ocado's unique and proprietary technology to offer unbeatable choice, compelling service, and reassuringly good value, underpinned by efficient and effective operations.

Ocado Retail is in the early stages of driving growth

Revenue increased 11.2% to £2.47bn and adjusted EBITDA was £26.8m (2022/23: loss £15.1m). While adjusted EBITDA improved, M&S group's share of adjusted loss increased to £37.3m (2022/23: £29.5m) due to higher interest costs on shareholder loan funding and a write off of a deferred tax asset in the current year.

The rate of revenue growth accelerated during the year, driven by increased choice of M&S products, and improved value for money and service as part of the Ocado Retail 'Perfect Execution' programme. This has been reflected in a sharp improvement in net promoter scores. Despite this, profitability is well below original expectations and there is considerable scope to leverage our combined capabilities in sourcing and marketing, and to develop Ocado's delivery service and online experience.

Increased choice, availability, and value

· 4,800 M&S Food products were available on Ocado.com by year end, a 20% increase on last year. Availability has improved considerably, although there is further opportunity on the most important lines and at key event periods.

· Ocado's price inflation was less than the market, driven by improved value for money on M&S products as well as reductions under the Big Price Drop campaign. As a result of greater choice and improved value, sales of M&S products grew 15% in Q4 and represented 30% of basket items.

Developing more effective and efficient operations

· The new Luton CFC opened in September 2023 and delivered a rapid ramp up in operations as business transferred from less productive capacity at Hatfield, with the new site also providing a test bed for on-grid robotic picking. With capacity fees for Hatfield continuing to be charged by Ocado Group, we do not currently expect Ocado Retail to reap the full financial benefit of transferring to the new site.

· Ocado Retail still operates on legacy technology for its website, last mile delivery and supply chain systems. It will be migrating to Ocado Technology's much delayed 'OSP' solution over the course of the next 18 months, which is anticipated to offer customers increased convenience and greater personalisation, as well as long term operational efficiencies for the business.

Although the financial performance of Ocado Retail remains disappointing, the revenue improvement this year under the new management team has been marked. And in a world where several operators have exited the online food delivery market, the potential competitive advantages of the M&S / Ocado combination are increasingly evident.

[darrin1471] 21/5/2024 20:42

JG231. I will need to research the Ocado/Kroger history in more depth.
JG231. Are long or short OCDO?

[darrin1471] 21/5/2024 20:33

I would expect Kroger's exclusivity is based upon agreed roll out numbers

[stutes] 21/5/2024 14:47

If Kroger messed up in siting its spokes or store then why aren't Kroger paying Ocado for loss revenue/profits?

As for bigger CFCs - why the moratorium and failure to be paid for loss profits?
It just sounds Ocado is tied to Kroger regardless of moratorium.lost profits.,etc?

[jg231] 21/5/2024 12:29

darrin1471, as I'd understood it, one of the primary attractions of the Ocado deal was that it enabled Kroger to expand into areas where it didn't have a store presence. I guess what they've found out is that delivery is very expensive (customers don't want to bear the cost) and customers want to retain the choice of shopping in person or doing click and collect. In most places, it's much more efficient to use existing stores to fulfil online home delivery (short last mile) and allow customers to collect (no delivery cost to the grocery). The Ocado model builds in a long last mile by design and this is simply inefficient.

[geoff0458] 21/5/2024 12:21

Heres the link timmy11

[timmy11] 21/5/2024 12:17

Ocado: Marks and Spencer-linked grocer is fastest-growing for third straight month

[darrin1471] 21/5/2024 11:24

Stutes. Thanks, I read the article you posted and some of the links in it.
As you say Kroger have one store in Florida. They are closing one spoke in Florida and appear to have two remaining spokes and a CFC in Florida.
Kroger do appear to have multiple stores in Texas in clusters around Houston, Dallas and Fort Worth

The closing spokes in Texas are at Austin and San Antonio which do not have Kroger stores.
Expanding into areas where you have no stores would appear to be a much more difficult strategy

[stutes] 21/5/2024 10:23

I'm only negative on CEO whose track record shows to me he's the wrong person to run Ocado. I think someone like Jeff Bezos in charge of Ocado would have made better progress on delivering the strategic goals.
Just be dispassionate - fires, CFC rollout missteps and US exclusivity deal without Kroger paying for their freezing or delay to rollout, public PR spat eith M&S.

[stutes] 21/5/2024 10:14

Darrin1471
According to an article I posted sometime ago, two existing grocery-chains responded aggressively to Kroger's move into Texas and Florida. Two States where, I believe, Kroger had zero store presence.

[darrin1471] 21/5/2024 09:59

Stutes, Do you have any opinions on why Kroger are closing the three spokes?

[darrin1471] 21/5/2024 09:57

Stutes started this thread in May 2021 when the share price was around £20 so being 80%+ down is likely to affect your view on OCDO

[kingston78] 21/5/2024 09:05

Stutes, shares move up and down. There is no need for you to be so negative.

[darrin1471] 21/5/2024 08:32

I'm in at £3.49 this morning ahead of MKS preliminary results tomorrow.

[stutes] 21/5/2024 08:12

My comment about £3.60 CEO seems to be over inflated as share price is circa £3.49.

[stutes] 20/5/2024 16:14

I suggest money is the bedrock in measuring growth/success. The CEO has had 20yrs+ at Ocado, he's had long enough to deliver and learn on the job. Chairmen have come and gone and the CEO has remained in post.
Time for a proven value making CEO as opposed to £3.60 CEO [current sp]

[skintvestor] 20/5/2024 15:16

It's so obvious you are doing money!!!

[stutes] 20/5/2024 15:11

Anyone who taps the market for £billions can grow a business from a 1 van man outfit. The point is he's not the person to run Ocado now - he's not a Bezos, Musk or Buffet. The shares are down from £29 to £3.50, he negotiates through threats directed at M&S and the cfc rollout is peppered with missteps.
He is not the right person to lead Ocado - time for a closer and a Bezos in one person. Why not ask Bezos to run Ocado?

[skintvestor] 20/5/2024 12:40

The same CEO who started this company with a few vans delivering shopping out of Hemel Hempstead!! And brought it to where it is today!!

[skintvestor] 20/5/2024 10:02

You must be losing a substantial amount of money on your investment!! The way you keep slagging off the CEO!!

[stutes] 20/5/2024 09:50

Overall can the CEI deliver on the potential or should he go.
I think the CEO has possibly alienated those at M&S by threatening them with legal action. He has overseen missteps: in USA and Australia CFC rollout, fire damage to Erith and Andover (latter reported as having no sprinkler system fitted?)
I hold the view the CEO pay means it gives him little room to make mistakes- therefore the roll-call of Ocado missteps means he should go.

[gregpeck7] 20/5/2024 08:56

When you look at all the movement towards the US in terms of listings, flutters just gone. I think that's just a UK broker trying to play the magnitude down

[stutes] 20/5/2024 08:52

Shore Cap is reported as thinking the US listing is more a stunt. If this an accurate report I suggest Ocado cannot be seen to have engaged in a PR stunt - imho, the genie is out of the bottle and Ocado split/listing should happen asap

[qantas] 20/5/2024 04:14

Please do your own research as always and always follow FCA guidelines