Ocado share nosedives by 2.08% following quarterly results

Highlights

• Ocado registered a pre-tax loss of £501 million for the year to 27 November 2022.
• This one of the biggest £501 million pre-tax losses was the biggest in its 23 years of trading.
• Ocado Group (LON: OCDO), on 1 March, started the day on a low as it plunged to a low of 2.08% and was trading at GBX 535.80 at 8:44 am (GMT).

The United Kingdom's online supermarket and technology firm, Ocado Group (LON: OCDO), on 1 March started the day at a low as it plunged by 2.08% and was trading at GBX 535.80 at 8:44 am (GMT).

Ocado had a market cap of £4,533.21 million and has gone down by 60.7% and 12.52% on a one-year and a year-to-date (YTD) basis.

On the consumer stock, Ocado, on 28 February, registered its worst full-year losses. Ocado registered a pre-tax loss of £501 million for the year to 27 November 2022. This one of the biggest £501 million pre-tax losses was the biggest in its 23 years of trading.

One of the reasons for the major loss was its joint venture with Marks & Spencer Group Plc (LON: MKS) turned lossmaking on an EBITDA level. This was worse than the analyst's average forecast for a loss of £399 million and £176.9 million in the previous year. The group revenue was broadly flat at £2.5 billion.

'Encouraging momentum'

However, since Ocado Retail has grown 13% yearly, the wider loss is a dent, and Ocado's shares will be able to pull through. Ocado CEO Tim Steiner highlighted the encouraging momentum in the group's technology solutions division which sells automated warehouse technology to grocery partners worldwide.

However, the silver lining could be that Ocado Retail has grown 13% yearly to 940,000. The problem is that customers are putting fewer things in their online baskets due to higher food prices. According to Kantar Survey, Ocado's grocery market share has improved from 1.8% to 1.9% in two weeks to 19 February, besides increasing its sales by 11% on-year.

It will also be buoyed by the fact that shoppers are slowly returning to stores and keeping a close watch on their spending. Amid the soaring cost-of-living crisis, major retailers such as Aldi and Lidl are sending customers discount coupons to get more shoppers. This has resulted in online grocers postponing expansion plans.

Bottom line

While the retail giants have overall struggled amid the rising inflation and cost of living crisis, Ocado for 2023 still maintains a positive EBITDA forecast. Besides, it is also predicting a fruitful EBITDA for the technology solutions division and stable EBITDA in UK logistics. Ocado ended the year with cash of £1.3 billion.

Steiner is projecting that a strong balance sheet would help them to finance growth through the mid-term.