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The facts are that 3 Kroger spoke sites are closing.

"A spoke site has no bearing on the overall Ocado solution performance."

Obviously it reflects badly on the Ocado Solution model. Considerable cost and development time has been used up in creating these now redundant spokes. Clearly Kroger are finding it harder than they envisaged to break into grocery markets where they have no physical stores using the Ocado Solutions model. The read across is that any further Kroger Ocado rollout will occur in a slower manner and across a smaller geography than previously thought.

If Ocados technology "did not meet the benchmarks we set for success.” to use Kroger's words, then it's unlikely imv that Amazon will step in. Amazon are already successfully utilizing other grocery delivery technologies.

Kroger partner with other online grocery delivery firms, Instacart and Shipt for example. A logical assumption after todays news is that Ocados share of Kroger's online delivery pie will be less than previously thought.

Yes, as outlined they are spokes. The fact they are closing shows poor customer demand and an underperformance of Ocados solutions.

As these centres close Kroger could, if truly committed, mention upcoming new CFC commissions but they pass up that opportunity.

Kroger, as 5% shareholders of Ocado group have to voice their support for the rest of their Ocado CFCs. This though has to be put in some doubt after today's announcement.

Not a good indication for the future of Ocados Kroger relationship, also it won't help attract new grocery partners to sign up to Ocados delivery solutions.

https://progressivegrocer.com/kroger-closing-3-ocado-powered-e-commerce-fulfillment-centers

"The Kroger Co. has come to the end of the road with three of its e-commerce fulfillment centers. Ocado-powered facilities in San Antonio and Austin, Texas, as well as one in Miami, are set to close on May 25, with a spokesperson for the grocer saying they “did not meet the benchmarks we set for success.”

“Kroger’s commitment to innovation means that we test and learn quickly to identify the most effective ways to deliver fresh, affordable food to our customers,” said the spokesperson, adding that despite its best efforts and support from new customers, the facilities did not see the type of success the grocer expected."

Ocado has lowered grocery prices over the year significantly lower than food inflation. This has created an uptick in customer orders however in the latest Ocado retail trading statement there was no change in the sales/EBITDA (Ocado's chosen profitability metric) guidance for Ocado retail....

"There is no change to the guidance issued on 29 February with the Ocado Group FY23 results."

Yes, if rivals absorbed costs and increased grocery prices by less than inflation they too could have a 'surge' in orders. The don't do this though as it doesn't result in a 'surge' in profits...

Yes, if you took that metric you'd say that Ocado is worth 9 x as much as Lloyd's bank. The reality is that Ocado is around 1/8th of the market value of Lloyd's Bank.

In general in Europe and in the US listed shares are set in bigger denominations than in the UK. This has no bearing on the companies value.

Yesterdays mediocre results at Ocado retail point to very little profit currently and very little profit forecast for the future. This obviously matters a great deal as the Ocado retail underperformance acts as the most advanced example of Ocado Solutions systems in action. There has been a slowdown in new grocers signing up to Ocado Solutions. The lack of profitability acts as a deterrent to others signing up.

Lack of profit now and into the future means Ocado group have a much reduced profit flow from their Ocado retail arm. Were Ocado group to sell their half of Ocado retail currently the price received would be lower than expectations.

The market rightly views Ocado retails underperformance as very damaging to Ocado groups prospects. A downgrade below issued today.

RBC cuts Ocado price target to 420 (500) pence - 'underperform'

Growth in volumes and market share achieved by absorbing costs and not increasing food prices by inflation. Food inflation over last year 7%, Ocado retail goods increased by 2%. Drives up orders but it leaves profits unmoved. Ocado retails EBITDA guidance remains unchanged today, see end of their statement.

I expect another set of underwhelming results for Ocado retail tomorrow.

At last results it was revealed that Ocado retail is only at 75% capacity. Leaving 25% of their warehouse estate idle. To solve this costly overcapacity Ocado retail have been reducing the costs of groceries in a bid to generate more orders and thus to fill their warehouse space. This though reduces margin and delays profits further into the future.

The market is seeing through this strategy. Without new initiatives to utilize the empty warehouse space the share price will continue its drift lower.

2 analysts updated after the latest results, Bernstein and Barclays. In both cases they have reduced their price targets.

Yes, and the fact Ocado are threatening legal action against a core partner gives a strong hint that they are concerned re current cash flow..

They've spent huge in developing the Ocado reimagined tech in the anticipation of existing customers ramping up CFC orders and new big partners onboarding. This gamble hasn't paid off thus far so cash flow is under pressure going forward.

Saudi deal is v small, no finances of the deal outlined in Ocados results. No automated CFCs involved in the deal. New contracts of bigger substance are needed if the share price is to rise.

Yes, that was another unsubstantiated bid rumour. There have been many over the years...

The Ocado reimagined tech has been available to order after it's launch very early in Jan 2022...

You can access analyst calls re Ocado. Below example is re RNS release of Ocados last JV trading statement in Jan 2024

"Ocado Group, on behalf of the joint-venture, will be hosting an analyst conference call at 8.00am today. Please use participant number: +44 (0) 33 0551 0200 and confirmation code: Ocado Analyst Call. A replay facility will be available through an on demand link for 90 days following the announcement."

Results time is primetime for Kroger to lay out their strategy and dispel doubts regarding their further roll out of Ocados tech. They declined.

Ocado reimagined tech has been available to order since it was unveiled in 2022. Kroger has other online grocery delivery partners, Instacart and Shipt for example. Personally I see Kroger reducing costs and altering their online delivery strategy to Ocados detriment..

Kroger's strong results were good news for Ocado but again Kroger were unwilling to commit to ordering further Ocado powered CFCs in their results presentation. The prolonged uncertainty regarding Ocados Key partnership continues to erode Ocados share price...

Yes losses should come down as demand for new Ocados CFCs has dipped. Both Ocados major partners have stalled building new CFCs. Kroger has an ongoing pause and M&S confirmed no new CFCs for at least 2 years.

The M&S dispute looks terrible for Ocado. Less so for M&S, who have the upper hand in the dispute.