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Ah, 200 daily moving average, we’ve been expecting you!
Right, where were we? Ah yes, MKS in a reversal downtrend :( Is there no end to this madness? Yes, but perhaps not yet :/
The January retail data was a bit confusing. The BRC report on 6 Feb did not paint a rosy picture but the ONS report on 16 Feb was much better overall, except for clothing, and this appeared to support the mid>late Feb rise in the SP off the back of it.
I have mentioned a couple of times the news void until FY results in May (still two and a half months away) and that void is, unfortunately, currently being filled with the negative press around the Ocado situation, with nothing on the full group activity to counter it in the short term. The February BRC report is due out at midnight tonight so that may be the next catalyst, the ONS report is not due until 22 March.
Chartwise - we skipped the anticipated dip to the rising 200DMA at 225 but the SP has now resumed course and looks like tagging it at 227 in the next day or two (unless tonight’s BRC is awesome, dude). The first gap to 224 is lurking just beneath - like some kind of ominous sharp toothed trap type of thing - and the full H&S pattern still has plenty of time to complete to close the second gap at 204. Ouch!
Regret to inform that I do still see this concluding around 200-204 unless there is significant positive news to counter it this month. Other than the retail data we are looking at you Easter bunny…what joy will you have for us?
Meanwhile, I’m off to find a sledgehammer and a map of Oxford Street…
Usual research caveats and pub rules apply, all just thoughts for consideration with no advice intended. I don’t like being this pessimistic but it is my honest view, at this time.
-------
For past ref:
The BRC doom:
https://brc.org.uk/insight/content/retail-sales/retail-sales-monitor/reports/202401_uk_rsm/
The ONS sunshine(ish):
https://www.ons.gov.uk/businessindustryandtrade/retailindustry/bulletins/retailsales/january2024
BBC News - Ocado warns M&S of legal action over food deal
https://www.bbc.co.uk/news/business-68433637
Please do your own research as always and always follow FCA guidelines.
Thanks for posting Corry, I'd missed that, great news for a Friday, though I suspect that view isnt shared by the Gove household...fantastic.
Great example of sensationalistic hack journalism.
Https://www.telegraph.co.uk/business/2024/03/01/ocado-failed-to-deliver-marks-and-spencer/
Agree Chiltling. What does taking 100% of Ocado retail mean?
Do M&S Get the CFCs and staff, vans, brand? Even then surely there is a dependency on Ocado for the Tech . How will that work? Isn't it best to keep Ocado involved on minority stake?
And what of the brand? Ocado itself has a customer base established before M&S... Would they have to rebrand this or could it be M&S by Ocado or something similar where you are not doing away with brand altogether.
Is this so called disagreement actually a leak or is it simply press speculation or even bogus information fed to the media by someone shorting the stock - anything is possible.
Anyway, I think agreement be quickly be reached - probably before the Ocado Retail trading update in late March.
Ocado say they will treat Ocado Retail as an investment from April next year. The consequence of this will be that from that point Ocado Retail will basically come under a M&S remit. Assuming the business is in good shape by then, I think we will see a rebranding of Ocado Retail to M&S and probably an agreement to sell the other 50% to M&S with an extended payment period of maybe 5 years.
I think it looks like M+S trying to wriggle a reduced final instalment of only £28Million but the Ocado CEO seems to be saying that they are owed a lot more and he seems pretty confident of their case despite what M+S are saying, and that there is always the legal route. The good thing is that they are in dialogue about it.
Have to agree with the earlier poster though that dirty washing shouldn't be getting aired in public and there is clearly somebody leaking information. Not good publicity for either company really.
Mitigation that benefits the targets such as Covid digital uplift, and subsequent decline back to just above normal shopping habits can be argued in court, the targets were agreed and only lawyers will benefit from a fight.
Even though any legal fight in media will only serve to try and pacify investors.
Strategically, end game might be the move away from operational retail for Ocado group, and for Mks to make a fair value bid for other 50% that can satisfy both parties.
That doesn't sound like a good partnership. This shouldn't be played out in public.
I assume it is M&S playing hard ball potentially around pricing the other 50%?
who knows but it is not a good look for either company
Https://uk.finance.yahoo.com/news/ocado-threatens-sue-m-row-082135796.html
The fact is, this is about establishing what we do most of best and finding fewer ways of doing more of it less!
Interesting reading from Ocado. One could read that as paving the way for MS to buy the remainder of Ocado Retail in the not too distant future? But good to see an improvement in Ocado Retail...may even be tempted to dip my toe back into Ocado!
" Ocado grp losing 85% of their declared revenue is a big step."
Yes...but what will really matter is the loss of Ocado Retail EBITDA , not the revenue ...as the EBITDA contributes to cash inflow ...and the EBITDA margin is of course a very small % of their revenue
Ocado grp losing 85% of their declared revenue is a big step.
Its good to see a return to profitability at Ocado Retail - underlined today by excellent results from Ocado Group.
The following is very relevant for MKS shareholders -
Deconsolidation of Ocado Retail - from Ocado results.
"Ocado Group plc and M&S are both joint equal shareholders of Ocado Retail Limited. At present the results of Ocado Retail Limited are consolidated into the results of Ocado Group plc as Ocado Group plc are deemed to be the controlling shareholder via certain tie-breaking rights. Our current intention is to give up those tie-breaking rights to M&S in early April 2025. There will be no change in the economic interest of both shareholders in Ocado Retail Limited, or any consideration paid by M&S, as a result of this proposed change. After giving up the tie-breaking rights to M&S, we expect that the results of Ocado Retail Limited will cease to be consolidated into the results of Ocado Group plc and will instead be equity accounted for as an investment from this point onwards. From this point, M&S would have the right to consolidate the results of Ocado Retail Limited pursuant to the terms of the original Shareholder Agreement signed in August 2019 when the Joint Venture was formed."
Https://www.dailymail.co.uk/news/article-13125027/marks-spencer-UK-favourite-supermarket-survey.html#:~:text=Marks%20and%20Spencer%20is%20the%20UK%27s%20favourite%20supermarket%20%2D%20even%20though,score%20of%2076%20per%20cent.
There is no mcap for Ocado retail. It’s a JV
Perhaps would be nice if MKS could use this as leverage to take ownership of the other half of Ocado, but the market cap still seems silly, nearly the same as MKS.
Marks & Spencer is due to pay a final instalment of £190.7m by August after the pair joined forces in 2019
Ocado used to count Waitrose as its retail partner but dropped the upmarket grocer in favour of Marks & Spencer
Ocado used to count Waitrose as its retail partner but dropped the upmarket grocer in favour of Marks & Spencer
OCADO
Marks & Spencer is withholding a multimillion-pound payment to Ocado Group after their grocery delivery venture missed key performance targets.
It's possible they were sitting just below 3% previously, perhaps from purchases much lower last year, and then took the opportunity this month to buy the dip to top up?
Apologies- share purchase price was meant to be stated at £2.37/ £2.38
So RWC Asset Management are the largest institutional investor on the share register now at 4.73%. Shares purchased at around 37/38p on 9th February.
They won’t be wanting to see much further drifting in the share price.
I wonder if Silchester International Investors have been building up a stake like they did with Morrisons?