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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.

The markets patience is wearing thin re Ocado groups ongoing large annual losses given the very slow new partner sign up to Ocados reimagined technology and the ongoing issues with their 2 main partners..

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.

Simply have been stating the obvious reasoning for the continued fall in Ocados share price. Profit is made by predicting share price trends, positive or negative and acting accordingly.

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.

It's just empty positive bluster from PI. The trend for Ocado shares is clear, that downwards trend is continuing today. The rationale for the trend is obvious.

Most probable outcome to below events...

"Sainsburys financial update - 25th April - Little effect on Ocados SP

Ocado AGM - 29th April. Tim Steiner gets his pay award through just after a large shareholder rebellion

Kroger Update - 8th May - Very little positive news for Ocado from Kroger

M&S financial update - 22nd May - No resolution to the Ocado payment. JV still underperforming. 25% overcapacity of Ocado retail outlined by M&S previously has reduced a little but will take more than a year more to resolve.

Ocado - HY results - 16th July. Ocado retail disappointing, v small profit. Ocado group large losses obscure increase in overseas solutions income.

Obviously it shows the Ocado solutions model hasn't worked for Kroger breaking into new markets as it had hoped. Read across is that Kroger will build far fewer Ocado spokes in the future and be hesitant about moving into geographies where it has no physical presence. Other potential grocery partners overseas will pick up on Kroger's dissatisfaction with the Ocado spoke performance.

A continuation of the obvious downtrend for the share price. Negative issues in Ocados 2 major contracts. Kroger closing Ocado spokes, M&S threatened with the prospect of legal action. Huge overcapacity issue at Ocado retail hampering profitability. Large annual losses still being recorded by Ocado group. Chairman leaving. New grocery partner sign up very slow to Ocados solutions etc.

Iranian drone attacks. Stock market slide. Oil price spike, Ocados delivery model is a heavy consumer of fuel as it delivers to customers from heavily centralised hubs. Risk assets sold off. Ocado share price drop continues.

It's this element of Tim Steiners proposed pay that's the most contentious...

"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/

Punters are just buying in for speculation however the direction of travel re this share is obvious.

Negative issues for Ocado on their major 2 contracts, Kroger and M&S. Huge overcapacity at Ocado retail. Recent large Ocado group annual loss declared. Very slow sign up of new Grocery partners. Chairman stepping down. Interest rates predicted to stay higher for longer after recent data.

Sangijuelas1,

IMO, +3 months is the most optimistic timeframe of Kroger ordering new CFCs, +12 months pessimistic. Personally I think the moe bearish scenarios are more likely.

Yes the Autostore cash in this year's p&l. It won't be available to help obscure losses next year.

The Kroger Ocado relationship is key to the share price imo. The longer Kroger extend their pause on commissioning new CFCs then the share price will continue to drift. Personally I believe they will continue to pause commissioning new CFCs for another 3 months +

Ocado groups losses from recent FY 2023 annual financial report as below:

"Loss before tax of £(394)m, taking into account £187m from the settlement reached with AutoStore, an improvement of £107m versus FY22"

Were it not for the one off Autostore payment to Ocado then Ocados losses for FY23 would have been greater than FY22.

The Autostore payment to Ocado of £187m is included in the Ocado group 2023 annual financial report figures.

Marks and Spencer's upcoming payment to Ocado is due to be £190m. It's heavily contested by Marks and Spencer's and may be subject to a legal dispute. That upcoming payment is widely known to the market and is a one off payment.

"Loss before tax of £(394)m, taking into account £187m from the settlement reached with AutoStore, an improvement of £107m versus FY22"

Above is from latest annual results. Were it not for the one off payment from Autostore to Ocado then the losses this year would have been higher than previous year.

No sign currently that the cash burn rate is slowing..