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OCDO shares are swimming uphill today.......

The previous message was sent inadvertently. Here is a complete and corrected version

AMO

This is an extract from a report on the MKS/OCDO joint venture. As you see, your assumption is both valid and relevant to OCDO's profi

"Shared JV Profits: Directly tied to sales volume, as revenue comes from grocery orders (e.g., Q3 2024 saw 15% revenue growth to £658 million, driven by 15.5% volume growth to 249.9 million items)."

There is a double whammy here, as volumes rise, so OCDO's revenues will rise and they also affect the JV deal which was due to pay OCDO £190 million for volume targets hit, it didn't happen, and MKS and OCDO are still in dispute over resolution, that process can/will be sorted sometime, and rising volumes, meaning the target may or will be hit later than anticipated, will sway the outcome positively for OCDO.

AMO

This is an extract from a report on the MKS/OCDO joint venture. As you see, your assumption is both valid and relevant to OCDO's profi

"Shared JV Profits: Directly tied to sales volume, as revenue comes from grocery orders (e.g., Q3 2024 saw 15% revenue growth to £658 million, driven by 15.5% volume growth to 249.9 million items)."

There is a doublw wahmmy here

Hi beardy, I've never bothered to tick the opinion option, BUT with very few exceptions (I do occasionally post warnings on stocks I think are heading down), I post on stocks I am invested in or am considering. I often post when I've bought and sold, and at roughly what price, and so my opinion and my position is usually clear from the text. In this instance, I have been buying lately on the basis that a recovery, modest or possibly significant, is likely here. The Lewis appointment is a very good one and adds to my confidence. I have, therefore, for the first time ever, filled the opinion box!

Good find Sangi. I have repeatedly said that OCDO technology is not limited to grocery shopping, but is applicable to many of the intermediate supply chain functions. This demonstrator is clearly aimed at that market, and if/when the first supply chain company, in whatever field, strikes a deal with OCDO, that will be game-changing. Setting the hub up in Dallas gives OCDO local access to the fastest-growing business areas in the USA, and it seems a reasonable assumption that OCDO would not be making this investment without high confidence that there is a substantial non-grocery market for their technology.

First, you're not THAT Charles Munger, are you?

I agree with what you say, and yes, shedding the Thailand business was a key component of the turnaround and removed a business that was never going to compete successfully. There is a strong bias in favour of local ownership in Thailand. The Aussies have a fingertip hold in some areas, but mainly with their own community, which is large. (I lived in Bangkok for some time, babysitting the grandkids). As noted in my previous posts, I think a similar strategy, unloading in areas where competition is stiff and local bias exists, is in play here. I can foresee a slimmer company with lower sales, fewer brands, but importantly lower costs and greater profit, that's what will drive the SP.

I think you're absolutely right about the falling alcohol consumption, but the same is true of smoking and well-run (if morally questionable) companies still make substantial profits there. It may well be that the success of Guinness Zero is a model to follow, there are lots of low alcohol or no alcohol wines (though IMV most taste awful), BUT technology will, I have no doubt, solve the problem and drinks with lower alcohol content and which appeal to the young will emerge. I agree that the process will take years rather than months, and I also fear that market patience is less than it used to be, but mine isn't, and I will hold for enough time to see a better SP than now.

As an aside, I am also watching Unilever and if/when they find a better corporate management team to manage a similar streamlining process(like Ben and Jerry's, I may buy again.

I promised/ threatened further posts on this topic, and here it is (this will be the last, I think there is enough evidence to judge DGE's direction of travel under DL. I mentioned in my previous post that both staffing and debt levels were likely to be the targets to address, and here is some numeric evidence to back that up. Between 2014 and 2020, TSCOs' staff numbers fell from around 500,000 to just below 400,00, they have subsequently continued to fall and are now down to 330,000. If that suggests overmanning as well as "drastic" reduction, I think you'd be right. As to debt that also fell for TSCO from around £18.6 billion to £15.6 billion in the period.

BUT you can ask (I know you will) can the same happen at DGE? I think the answer is yes This site doesn't really allow for useful cut and paste so i'll just lay some figures from the Annual report out

Net sales North America $7.9 billion, staff numbers 3,243

Europe $4.8 billion, staff numbers 10,608

Asia pac $3.6 billion staff numbers 8,634

lat Am $1.8 billion staff numbers 4,408

Africa $1.8 billion staff numbers 2967

While I'm sure these figures aren't like-for-like I wouldn't be surprised to see major staff cuts in Europe and a significant retreat from business in lat am and Africa, the latter two by some sort of franchising arrangement rather than a complete withdrawal.

On the profile of DGE's debt, I've cheated 'cos it's bloody complex, so this next para is AI-generated

Maturity Buckets: ~$2.5B due 2025–2026 (near-term focus); ~$3B in 2027–2030; ~$5B+ beyond 2030. This staggered profile reduces refinancing risk, with average maturity ~10–12 years.

Interest Rate Profile: Lower rates on older EUR bonds (1–3.5%); higher on recent USD issuances (5–5.6%) due to post-2022 rate environment. Overall effective rate ~4.1%, expected to ease to ~4.0% in FY26.

Currency Mix: ~60% USD, 40% EUR; helps hedge FX exposure.

As you can see, there is $2.5 bill due in the next year or so, and much of it in dollars because I guess that's the currency for most of their bills are at MUCH higher coupons. Whether a substantial program or refinancing is possible is debatable.

As the cartoons used to say

That's all, folks!

The trades were recorded almost simultaneously as OFEX. They were either two significant holders executing a deal or possibly a deal between two market makers. The trade price was 211.9. In either case, one was a sell and one was a buy, and it has not disturbed OCDO's gentle recovery from recent ten-year lows.

Stupmy, entirely true, but as I have mentioned before, the MKS/OCDO tie-up, which is growing in volume terms and as a percentage of the UK grocery market, is at the point at which its value becomes a very significant part of OCDO's MC. Holders or prospective acquirers of OCDO are getting the international market at knockdown prices.

Market Share: 2.1%.

Sales Growth: Ocado remained the fastest-growing grocer in the UK, with sales rising by 15.9% compared to the same period the previous year. This was its highest rate of sales growth in over four years.

Online Popularity: The performance benefited from the popularity of online orders, with the online channel continuing as the fastest-growing overall for grocery shopping.

Trend: This marks the third consecutive month that Ocado has been the fastest-growing British grocer.

The short answer is that for various reasons, LGEN's last year's revenues were substantially lower than normal. For several years, LGEN revs were

£ 1 billion+ and last year they were only £170mill. The market fully expects the next results to show revenues back to a more normal level, and so while the trailing P/E is very high, it is likely to fall back to more normal levels (high single digits to low double). The fact that the SP, while not flying, is equally not plunging illustrates the market's recognition that there is no crisis.I am a happy and relaxed holder.

Typo in my previous post in the penultimate para, read"tailwind " for debt costs going down, not headwind.

As a TSCO shareholder during the Lewis years and beyond, and now a holder here, I thought I'd offer a preview of what the next few years probably hold for DGE. Given the constraints of post lengths here, I'll have to keep it much briefer than the topic deserves and might actually end up writing several posts on this theme, so here goes.

First, if the TSCO experience is anything to go by, patience is needed. While DL did reshape TSCO thoroughly, the short to medium-term effect was to shrink the company, cut sales, and have little immediate effect on the SP., IIRC, it rose maybe 20% during his tenure, but has improved significantly in subsequent years.

So what did he do? The following is my interpretation, so others might disagree. He implemented a culture of data-driven decision making, the TSCO clubcard is key to this, TSCO know what their customers buy, how often and what they are willing to pay.

Second, he used this data to manage volumes. stock control, reordering and delivery, no pile of stock waiting to sell ( we all know that this was part of DGE's last screw up)

Following that, supply chain management was improved. How this goes with premium spirits, I don't know; it's no doubt much harder to plan for years of maturation for whisky than getting fresh vegetables to store. What will be much easier to achieve is to bin some low-volume and/or low-margin products, expect to see a wave of "rationalisation" of the product mix.

Next step, cost cutting, staff costs and the debt burden are the obvious targets. DGE has 30000+ employees, some will go, and it pays $600 million per year to service around $20billion of debt.

DL has a thing about cash management, so expect to see rationalisation of that. A headwind is that debt costs are drifting down worldwide.DGE also has a capex plan of $1.5 billion for the next FY, which will be targeted.

Finally, for now, though you have more to look forward to, patience is needed. I will hold for some years, if necessary, though optimism will precede results, and we shareholders may benefit in the medium term.

FAO Bigjock (and all the others who STILL don't understand shorting)...

Premier Milton has almost certainly raised their short as further insurance to cover their LONG position in OCDO. For the Umpteenth time, I say NOBODY holds naked shorts. In most cases, the short position is an insurance against a sharp fall in a holding in a volatile stock. In this instance, it looks quite probable that OCDO stock will rise and PM will profit on their long, while losing LESS on the short. If, on the other hand, the recent near 10% bounce falters, the short wins while the long loses.

I am astonished at how many posters here do not understand the role of shorting as insurance for holdings in highly volatile stocks......

Not all companies make their strategy explicit, but here is a lift from the website of Citadel, which frequently shorts OCDO

"Long/Short Equity Strategies"

Citadel employs long/short equity strategies, where the firm takes BOTH long and short positions in individual stocks or equity indices. By identifying undervalued and overvalued securities, Citadel seeks to capture alpha and mitigate downside risk, generating consistent returns for its investors."

I keep saying that I won't bother repeating myself on how shorts work, but it is still obvious that most still don't get it.

See my post on 5/11 at 15.55 for a fuller summary of Kroger's problems in implementing the OCDo system.

Not to my shopping list but to my post of a couple of days ago...

In the unlikely event that OCDO's SP continues to fall to a point which endangers their survival, it's worth noting that almost ALL of their customers are in a position to buy the company with petty cash.

CASINO is valued at over £100bill

AUCHAN, though privately owned, is probably worth about the same.

COLES MC is Aussie$30 billion

While that doesn't offer any guarantees, it is a safety net that probably kicks in comfortably above the current MC and hence SP.

I added first thing because, as is often the case, the market reaction to broadly positive news was to mark the stock sharply down at the open. This pattern is now common and, as I have posted elsewhere, is a function of auto trading bots herding together. As I fully expected, the SP has bounced back and is likely IMV to move gently upward as the relative positivity of the RNS is digested. It is also probable IMV that, amongst the wreckage of the budget, there will be some positive words and maybe even some positive action to support a house-building industry in despair.VTY is best placed to take advantage of any tailwinds created in the budget, and I am happy to hold for 20/30% from here.

I was drafting my previous post as yours was being posted. My only comment is that, as the matter is obviously being discussed, there is clearly a view that it may be a possibility. It may not be on the CEO's mind now, but that doesn't rule it out in the future, and as the JV moves into profit, its value rises, and the cost to MKS of buying it out rises. Never say never.

I have held OCDO shares on 6, maybe 7 occasions and am now buying again. I posted a while ago that I had turned positive after the shock of the Kroger announcement and promised to set out the reasons why. I never got around to doing that, but I have dug out my notes(yes, scruffy sheets of paper with scribbled writing!).

Here is a brief summary.

1 The Kroger problem

The comments about a review of the OCDO deal were, as most of us know, made by a temporary CEO who came out of retirement to take the helm at Kroger. I have no doubt that he, like me, has reviewed the Kroger rollout and has some doubts about it. He's right, and this is why I think so.

First, the USA's bigger cities are vastly spread out, occupying hundreds of square miles beyond the high-rise centres, so vehicle journey times to supply dozens of homes are much greater than you would expect in the UK. I guess this led to lower deliveries per hour/day, more mileage, driver hours, etc.

Second, the choice of cities to start seems to have been based more on the availability of warehouse space, rather than the optimisation of customer locations. Of the top ten Kroger/OCDO locations, only 2, Dallas and Chicago are in the top 20 US cities by population; some of the very largest(NEW YORK, LA, HOUSTON)have not yet been set up for OCDO warehouses.

That I suspect, means that the efficiencies, customer volumes and quantity of sales are not meeting expectations. It is therefore no surprise that a review is in train. That, however, does not necessarily mean the reduction or even cancellation of the rollout strategy or the prospect of ending the agreement with OCDO , though it might well mean different criteria being chosen for further rollouts.

2 MKS/OCDO

Changing tack, today's news suggests that the MKS tie-up is rapidly approaching break-even or may soon be profitable, and as I stated in a post this morning, there is every prospect of an MKS bid to buy our OCDO and use them as a supplier rather than a partner. As the JV moves into profit, it means IMV that its value ought to be at least £ 1 billion, which goes a long way to underpinning OCDO's current Market cap.

3 Anecdotal evidence next, unreliable but relevant.

I have a son who lives in the eastern suburbs of Sydney (the posh bit)and I spent three months in Oz this winter, during which I met a surprising number of customers(mostly v of the Coles/OCDO link up, reaction is highly positive, OZ is almost a duopoly when it comes to groceries, Coles and Woolworths (remember them?) dominate the market and Coles is seen as the more upmarket brand and It looks like the OZ business is flourishing.

Finally, as I have mentioned on a number of occasions, OCDO stock is very tightly held, which magnifies movements both up and down, so, as and when a more positive outlook is seen, the SP will react with a much greater SP jump than one would expect for a company of this size.

I have made money here before and, buying at these levels, expect

Https://www.londonstockexchange.com/news-article/MNG/m-g-plc-q3-2025-trading-update/17311575

All looks very positive and serene, one of several companies riding on the back of the move to offload pension liabilities by many organisations.That trend still has some way to run, and I expect MNG, LGEN and others to post steadily rising AUM and associated low percentage but stable profits.

I am a happy and relaxed holder here.