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Sangijuelas1,
When Kroger were announcing new CFCs and spoke builds with regularity this boosted the share price. Many assumed that Kroger would go far beyond their contracted 20 CFCs and build out 40+ CFCs with associated spokes. Kroger havent commissioned any extra Ocado CFCs or spokes for around 8 months now. They have now closed 3 spokes. The obvious read across IMO is that the eventual Ocado network that Kroger will build out will be smaller than previously thought with less focus on new markets. Also that they will be slower in commissioning new Ocado hardware. You disagree with this point, fine.
Kroger have talked about their online sales positively in results calls. They though deal with many partners to facilitate their online sales, Instacart, Shipt etc. The read across from the spoke closure to me is that they will be leaning on those other online providers more and not expanding as much as they had thought initially with Ocado after the spoke failure.
The Kroger spokes closing isn't terrifying but it's been a big driver of the recent share price drop. The obvious read across is that Kroger will be building out a less extensive Ocado ecosystem and will be developing it in a slower timeframe than previously envisaged.
However as always DYOR.
I've been highlighting issues at Ocado on this board for near 2 years now. Most ignore any negative talk though, they want to buy in to make a quick buck, swayed by Ocados slick corporate headlines, not researching in depth. There's a real lack of genuine deep knowledge re this company amongst those who invest in it.
I've been positive on Ocado in the past, was an early investor in the company. Cashed out for a good profit. For near 2 years now have been bearish on Ocado after my research pointed to issues/ flaws within the company. Switched my investment to profit, extract value from Ocados fall. Very happy to have done so. Cashed in most of my bearish position but still have some in place. Further to fall imo.
I always look for value and align my investments to profit from it, whether that be long or short.
Exane were spot on Boyo. If you asked them now I'm sure they'd give a more downcast price target than their previous one. Recent results both Ocado group and Ocado retail have been poor. Ocado are now on the verge of a legal battle with M&S. Kroger shutting multiple spokes which is a red flag re future expansion expectations of Ocado infrastructure at Kroger. Yes Kroger are committed to online grocery however they have many partners in this space, Instacart, Shipt etc to carry out this function. The read across is that they will be using Ocado in a less expansive way.
Ocados online delivery model is a high consumer of fuel as they deliver to customers from heavily centralised CFCs
This is a vulnerability when the oil price spikes.
It's a risk off market currently and it's obvious for Ocado to drop further given the extent of issues at the company.
Not true poker chips, Ocado pay the great majority of the CFC build costs. Then they recoup these costs in the main via receiving a percentage of the value of the goods that pass through the CFCs.
If you look back at the history of Ocado when major contracts have been signed Ocado have carried out a corresponding cash raise. More recently Ocado have carried out cash raises independently of major contracts being signed.
Providing the upfront capital is Ocado's way of enticing clients to sign up to ordering the CFCs. More enticing for grocers to pay later via volume fees than stump up hundreds of millions at inception of the contract.
Concerns re slow CFC rollout and the recent Kroger spoke closures (as I have highlighted at length previously) are driving their reduced forecast.
"Ocado shares target trimmed by CFRA amid Technology Solutions concerns"
https://ca.investing.com/news/company-news/ocado-shares-target-trimmed-by-cfra-amid-technology-solutions-concerns-93CH-3353503
"The adjustments come as Ocado's current roll-out of its Customer Fulfilment Centre (CFC) is progressing slower than expected and is unlikely to meet the full-year estimate previously set out by analysts.
Ocado's key partner, Kroger (NYSE:KR), has also shifted its strategy, moving away from the initial goal of a home delivery service. This change in direction has led to the closure of three Ocado-powered spoke facilities. Although these closures are relatively minor in the context of the potential CFC order pipeline, they are perceived as a negative indicator of future performance."
Bet 365 is a private company. The owners can set their own levels of pay. Very different from Ocado
Ocado group is a public company owned by its shareholders. The board of Ocado should be setting appropriate bonus pay awards which have a link to the company's share price performance over the given period. Rightly there will be a lot of disquiet at this years Ocado AGM re the pay awards given the dismal share price performance of late.
If you just skim the surface the Ocado retail picture looks rosy. Dig deeper though and there are big issues. Due to wildly optimistic CFC builds, Ocado retail has around 25% spare capacity. This has created a huge fixed added overhead for the operation. In order to try to fill that capacity a little (fully resolving the issue will take 3 years according to Marks and Spencer's) Ocado have dropped prices below food inflation levels and run a huge coupon campaign offering discounts to customers. This has lured extra customers in but has led to no change in guidance re revenue and EBITDA in the last Ocado retail statement.
The other part of his bonus structure linked to the share price reaching £29 is less of an issue. It's the below which is highly contentious given that he will get a £5 mill bonus whatever direction the share price goes in...
"Steiner would also be able to receive an award worth 600% of his base salary, or almost £5m, even if targets for total shareholder returns and other performance measures are met but the share price goal is missed."
One issue that shows how Ocado is not bring run appropriately currently is Tim Steiners (Ocado group CEO)s upcoming proposed bonus pay structure. It's under discussion currently, will go to a vote by shareholders at the Ocado AGM.
It's very contentious given the recent abysmal Ocado share price performance, the group losses, issues on major contracts etc that have given rise to the fall..
"Steiner would also be able to receive an award worth 600% of his base salary, or almost £5m, even if targets for total shareholder returns and other performance measures are met but the share price goal is missed."
https://www.retailgazette.co.uk/blog/2024/03/ocado-15m-ceo-bonus/
Absolutely AquarianAge.
Shorts act as check in balance. Where a company is run well shorts lack presence. Where a company is failing then shorts start to mass. They can be an excellent warning sign for private investors of issues within a company.
You should invest in Asos. Even more shorts there than Ocado have. That share price is bound to increase right?
Shorters have rightly seen the underlying issues within Ocado and their recent results and capitalised on it.
These are small signs of normal activity for Ocado Solutions. Nothing big enough to move the share price up or obscure the far larger negative issues within the company. You simply need to look at the share price to see the extent of challenges Ocado is facing. Most will ignore this however and rise up against any negative talk when the trend line is blindingly obvious. My previous posts have outlined the negatives.
Smokinjoe,
Have you carried out any of your own research you'd like to share with us? You posted about Ocados recent results which were a strong update according to yourself. The Ocado share price has plummeted since then as of course they were the opposite...
My commentary re Ocado is stating the obvious. Most ill informed private investors prefer to ignore all negatives though.