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Prior to the war it was forecast inflation and interest rates would rise moderately. Of course we were at multi year lows so that was to be expected as the economy came back post covid. The huge unexpected jolt to inflation and interest rates though has been the war. Fuel and food inflation off the charts contributing to rising inflation elsewhere.

This jolt causes incredible issues for Ocado. Grocery consumers cut back in all areas. Very high fuel prices makes the Ocado delivery model more expensive. The current economic environment is one in which overseas grocers do not want to commit to lots of extra funding projects..

The Myrmex buy was good news. It has brought forward even nearer the day Ocado will again need to raise cash from its shareholders but it shows Ocado still have ambition, still are sticking to their plan of always improving, shows the wheels are not falling off the company, yet.

Still though the incredibly dire current economic conditions endure. Inflation and interest rates rampant. Chief cause, the Ukraine war, shows every sign of lasting another year or more.

Tomorrow is Marks and Spencers results release. I believe the current trading and forward guidance for M&S and any read through to Ocado retail will disappoint.

Good move re the sell pokerchips. Treacherous conditions for this share currently with US markets currently resuming their freefall. More downside to come imo....

Walmart and Kroger are investing but their situation is becoming under great stress. I believe they will cutback in some areas to safeguard their core business.

Don't get me wrong, I am a great fan of Ocado. Their service is the most comprehensive, polite, on time, least substitutions etc of all grocery retailers. Key to the consumer though is that Ocado services can never be described as cheap. It's the cost save that consumers are flocking to under current extreme economic headwinds, wherever that may be.

Walmart and Target have issued very disappointing recent results and they are very robust retailers. Key retail bellwethers. Consumers currently are cutting back and seeking out cheaper options across the board such as warehouse retailers..

Kohl's shares in the US have sunk 8% in premarket after their results released today. Contrast that to BJs wholesale results outlined by Pokerchips and an obvious conclusion is that consumers are tightening their belts and opting for cheaper warehouse retailers.

Not a good sign for Kroger/Ocado..

Pokerchips,

Kroger are a very strong client. They own around 6% of the Ocado group and always talk in glowing terms re Ocado. However the new economic reality is severely adverse and deteriorating at a rapid rate. Amazon have said they are looking at reducing warehouse space. Entirely possible that Kroger may slow the pace of their Ocado cfc expansion. I believe that the cost of finance is going to lead to many grocers prioritising reducing costs, keeping prices low versus spending funds expanding online.

I posted as long as I was positive regarding Ocado. Extraordinary events unfolding worldwide prompted me to re-evaluate. Still very interested in Ocado and may well reinvest at a later date.

Yes wolfofwarks, an extraordinarily tough current worldwide retail environment that could remain in place for a considerable time.

I would think the Ocado management are currently thinking of out of the box ideas to fightback. Partnerships with other tech companies, a large new external finance investor, selling part of the company etc.

Given the strength of the wind against them they need to look at strategy changes. Many things are very positive for the company but they are totally eclipsed currently..

Fair play SFH. Personally I have been pro Ocado for many years. Still very much like the company but a toxic ****tail of worldwide events has taken over and put this share into an extreme dip. You are judging it best to hold and you may be right in the long run. Ocados tech is excellent and Re:imagined greatly improved it.

We all have our views that we express here but ultimately it's up to ourselves alone to decide where and when to invest.

https://www.forbes.com/sites/sanfordstein/2022/05/18/walmart-and-target-miss-quarterly-estimates-dramatically/#amp_tf=From%20%251%24s&aoh=16528977669202&referrer=https%3A%2F%2Fwww.google.com&share=https%3A%2F%2Fwww.forbes.com%2Fsites%2Fsanfordstein%2F2022%2F05%2F18%2Fwalmart-and-target-miss-quarterly-estimates-dramatically%2F

Above outlines Walmart and Targets recent results misses. It's a broadly similar retail environment in the UK to the USA. However in the UK there will be the cost of Brexit delays/implementation on top ..

Hi bitbybit,

I'm good, cheers for your message. The macroeconomic environment has been changing extraordinarily quickly. We all need to look at it and reassess our investments daily in light of the deteriorating retail environment. Personally I sold my Ocado holding in early May. Reasoning being broadly that profits are being eroded in grocery retail by supply chain issues, reduced consumer demand, competition resulting in inflation price increases not being passed into the consumer etc.

Recently Walmart disappointed, today was Targets results day in the US. They are the world 8th largest retailer. The results were very underwhelming and this has caused their shares to fall 25% and most of worldwide grocery had fallen as the read across is that profits for other retailers will miss or be lower.

It is likely that Kroger and Marks and Spencers results will fall flat or disappoint. Likely too that those 2 retailers and others will reduce their tech spend budgets. Less grocery spend by consumers means less goods flowing through Ocados worldwide CFCs. It also means slower expansion possibilities. That in turn brings the next Ocado cash call on shareholders nearer. Ocado have recently been expanding their capacity in the UK greatly. Now it's clear to see though that demand is falling.

The Ukraine war has been the black swan event that has greatly increased inflationary conditions and has led to great costs for grocery retailers worldwide. Reasonable to assume the war will go on for at least another year.

Always looking at Ocado but am staying on sidelines as there could be further falls. May miss out on a big rise as this share could catapult in either direction but am declining the chance to take part currently.

Best of luck with your investing.

Newdealz,

The market continues to sell off internet food retail/technology companies around the world in the main due to dramatically rising interest rate forecasts which increases costs of future borrowing. The current retail downturn reduces revenue for these companies in their current growth period.

Hellofresh, Doordash, Deliveroo, Autostore etc are all being marked down. Very hard to guess next overall market moves. Underpinning Ocado is it's current 8 or more overseas contracts with many more CFCs opening around the world. Ocado has large value in its patents which so far have been contested and found to be completely Ocados own. Tim Steiner is happy to have his huge bonus kick in when the share price is £30. He'll be thinking of many moves to make up that share shortfall. Partnerships or a takeover in the future are possible.

That's an uncrossing trade, UT. It's an end of day book keeping entry, ignore that it's neither a sell nor buy.

Yesterdays move by the federal reserve to rule out needing more aggressive interest rate rises than those taken reduces some risk re Ocado shares. Ocado periodically borrows to finance further expansion of its CFC network

Good commentary Casapinos.

There is a clause in the MKS JV that only MKS can buy out Ocados share. I think that clause expires in around 3 years. With the current downtown in retail it's unlikely MKS will be buying out Ocados share in the next few years.

The rollout of Ocado CFCs has been greatly shortened by the reimagined Ocado tech announced this year. Management said they are in various talks with overseas retailers re potential partnerships. We've only had the new Polish CFC news since that tech announcement.

Is this the calm before new contracts are signed or will there be no new contract news or an extended period? This is for us all to judge for ourselves.

Ocado have never paid dividend payments. Realistically it will be at least a few years until they do. Ocado Solutions revenue flows will increase greatly when their contracted overseas CFCs are built out and operating. Ocado receive a percentage of the $ value of goods that flow through their CFCs. Some overseas CFCs are operational, the majority though are in the build phase. Currently Ocado prefer, like many big growth companies, to reinvest their funds to sharpen their technology to keep it ahead of the competition rather than pay a small amount to shareholders yearly.

There is a lot of value within Ocado. Ocado has over 950 patent applications. The company has built up huge knowledge in the incredibly complex online grocery automation field which others are trying to catch up on.
Ocado Solutions have various contracts around the world powering the online growth of some of the world's largest grocers. The online grocery market has expanded and in order to fend off Amazon's threat grocers around the world need to develop their own streamlined online operations.

The automation and online grocery trend will not end. Ocado is in prime position to grow further.

Best of luck with your buys.

Cheers for the link chilting. Very technical stuff.

Good to see Ocado shares rising gradually over the last week...

It's a good point graking. I think the tech needs a little more development and bedding down before it is licensed out. They may well head in that direction. Ocado are running an operating system for online groceries. Once the tech is streamlined this can then be built out quicker, cheaper etc. Ocado do not want anything that could increase the fire risk around their solutions.