Ocado finally delivers a profit

Shares in Ocado have slid despite the online supermarket making its first profit in 14 years.

Online grocer Ocado reported a pre-tax profit of £7.5m for the six months to the end of May, which leaves it on track for the first annual pre-tax profit since its launch in 2000.

It noted, however, that sales growth has slowed from 18% year-on-year in the first quarter to 15.6% over the half-year as a whole, when sales exceeded £400m. The average order size has declined marginally to £114.30.

What the commentators said

For instance, why are sales rising only slightly faster, or broadly in line with, the overall online grocery market? After all, chief executive Tim Steiner has said he thinks the big supermarkets' online offerings are years behind Ocado when it comes to quality and accuracy of service.

Investors worry that Ocado, even if it does have a bright long-term future, could now fall victim to the supermarket price war, said The Daily Telegraph.It "cannot remotely match the physical and financial scale of Tesco".

It hasn't been able to make a profit selling the high-margin products it gets supplied from Waitrose, added The Daily Telegraph, so "what hope does it have when margins decline"?

Furthermore, the price war has crept onto Ocado's home turf: online shopping delivery charges. Grocery shopping is undergoing the upheaval Ocado has always predicted. But that "does not mean it will be one of the winners".

Recommended

Improve your odds of investment success with these three stocks
Share tips

Improve your odds of investment success with these three stocks

Professional investor Tom Wildgoose of the Nomura Global High Conviction Fund highlights three of his favourite stocks.
2 Aug 2021
How to profit from pampered pets beyond the pandemic
Share tips

How to profit from pampered pets beyond the pandemic

Covid-19 has greatly boosted ownership. But the market had been expanding for years, and demographic, cultural and medical trends all point to long-te…
30 Jul 2021
Share tips of the week – 30 July
Share tips

Share tips of the week – 30 July

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
30 Jul 2021
Robinhood is going public – should you invest?
US stockmarkets

Robinhood is going public – should you invest?

Online stockbroking app Robinhood is going public on the US stock exchange. Saloni Sardana looks at whether it's worth a punt.
29 Jul 2021

Most Popular

Why the UK's 2.5% inflation is a big deal
Inflation

Why the UK's 2.5% inflation is a big deal

After years of inflation being a financial-assets problem, it is now an “ordinary things” problem too, says Merryn Somerset Webb. But central banks st…
16 Jul 2021
The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism
Economy

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism

Russell Napier talks to Merryn about financial repression – or "stealing money from old people slowly" – plus how Asian capitalism is taking over in t…
16 Jul 2021
Cryptocurrency roundup: Twitter founder’s “DeFi” platform
Bitcoin & crypto

Cryptocurrency roundup: Twitter founder’s “DeFi” platform

In crypto this week: regulators are getting worried; Jack Dorsey’s bitcoin DeFi platform; and dogecoin’s co-founder lambasts cryptocurrencies.  Salon…
16 Jul 2021