By James Davey
LONDON (Reuters) -Shares in Ocado, the British online supermarket and technology group, plunged on Thursday on market concerns the global roll-out of its robotic sites is too slow.
The group runs an online supermarket through a joint venture with Marks & Spencer, though its value is driven by the sale of its cutting-edge warehouse technology to retailers around the world.
Ocado shares were down 14% on Thursday, taking losses over the last year to 42% and reflecting market anxiety at the pace of new site openings for its existing grocery retail partners and a lack of further technology deals.
Ocado’s most important partner, Kroger in the United States, has slowed its roll-out of automated warehouses, or customer fulfilment centres (CFCs) as Ocado calls them, while its Canadian partner Sobeys has paused the opening of a fourth warehouse.
Ocado said “at least” seven more CFCs would go live over the next three years.
But it said two of these – for Kroger in Charlotte and Phoenix – were not expected to go live until early in its 2025-26 year as freezer technology is added to the sites.
Bernstein’s William Woods said the overall outlook for the technology division was “still soft”, with only about five additional modules of capacity going live in 2024-25. Also forecast revenue growth in 2024-25 of about 10% is lower than the 18.1% achieved in 2023-24, albeit at a forecast higher margin of 20% to 25%.
Reflecting a 14.1% increase in revenue to 3.2 billion pounds, core earnings, or adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), Ocado’s preferred metric, trebled to 153.3 million pounds ($194.2 million) in its year to December 1.
Ocado’s pretax loss reduced by 12.7 million pounds to 374.3 million pounds and the group said it was on track to hit its target of turning cash flow positive in 2025-26.
Revenue growth in 2024-25 for the Ocado Retail joint venture with M&S was forecast at “above 10%” at a margin of “circa 4%”.
($1 = 0.7900 pounds)
(Reporting by James Davey; Editing by Kate Holton and Barbara Lewis)
