Ocado shares jump by a fifth

(Image credit: Mike Kemp / Contributor)

published 22 July 2024

Shares in the online retailer Ocado jumped by a fifth recently after its latest interim results showed it has “nudged up” its cash flow and profit forecasts, says Isabella Fish in The Times.

Not only have pre-tax losses at the group narrowed to £154 million in the six months to the end of May, but group revenue also rose by 12.6% to £1.5 billion. It also expects annual underlying cash flow to climb by £150 million, up from a previous forecast of £100 million. Ocado’s solutions business, which licences warehouse and logistics technology to retailers, seems to have done particularly well, with sales increasing by 21.8% to £241.4 million.

The upgrade will “go some way towards allaying investors’ fears over the business”, says Lex in the Financial Times. The company has suffered a “series of blows”, including a decision by US supermarket chain Kroger to close three sites powered by Ocado’s technology, along with declining revenue from its retail arm.

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Shareholders will also be happy that Ocado’s management has said the group will not need to raise more cash and repeated its plan to become profitable on a pre-tax basis in five years. The upgraded results and guidance will certainly be “music to the ears of investors hoping Ocado might be in a better position to start delivering the goods financially in the not-too-distant future”, says AJ Bell’s Dan Coatsworth.

However, it still needs to “make a habit of regularly producing results like these” if it wants to “make the critics put away the knives they’ve been sharpening for some time”. That “may not be easy” given its “slow progress” in signing up new technology partners for its grocery logistics platform, while a few existing partners “have scaled back expansion plans involving Ocado”. Ocado’s relationship with its UK retail partner, Marks & Spencer, also remains “fragile”.

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Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

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