Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 28 August 2014 at 8:27 GMT

Equity on the Move: Ocado Group bleeds 14% lower

Head of Equity Strategy / Saxo Bank
By Peter Garnry

European equity indices are down in today's session with the DAX leading the pack with a fall of 0.9%. Among single stocks, some are particularly suffering with online food retail concern Ocado Group down 14% as some sell-side firms are downgrading the stock. Ocado is now down 21% so far this year.

Most traded European stocks

Source: Saxo Bank

-- Edited by Michael McKenna

Peter Garnry is head of equity strategy at Saxo Bank.
fxtime fxtime
Ocado does seem to have a flawed business model from the outset. Established via Waitrose for home deliveries except not only do they deliver the most unprofitable shopping eg remote areas but have their originator/founder compete against them with their own delivery vehicles in the cities especially within the very profitable London regions. The new depot and delivery hub is a mammoth capex drawdown which hasn't been a smooth project and whilst their new found client Morrissons must help the discounts for home delivery must be unsustainable imho. Free deliveries or £1 home deliveries for any size shopping delivery must stop.
mannyboy mannyboy
This comment has been redacted
fxtime fxtime
It would appear Ocado is not free cash flow positive as it duplicates/recharges transactions of Morrisons when they are posted into the Waitrose systems held by Ocado. A sort of internal sales record really imho. On this basis it is unlikely to be cash flow positive for 3>4yrs !! Ocado claim that their new bespoke distribution centre is unique and will enhance profitablity by being accretive to the P+L acct once all start up snags are resolved but these ''snags'' have run for two years now. Swisslog Co' who provided the software describe it as a classic whitelabel product which it has supplied to 49 other european ecommerce ventures some off which are in the UK. Thus Ocado is far from unique. Also Waitrose itself continues to compete against Ocado in Inner Cities such as London and only utilise Ocado in less populated regions.


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