Ocado

[Sebo]

Tie up with Morrisons

Link

This is the bit I don't get:

Article Said:

Morrisons has paid £170m to buy Ocado's new distribution centre in the Midlands and will spend a further £46m to expand the site. Morrisons will then lease half of the automated warehouse back to Ocado, which will continue to use the site for its core grocery business.


Are Morrisons paying Ocado to run their delivery business or is this just Ocado freeing up some capital and doing a sell / rent back deal?

[CoolHands]

probably a tax wheeze so the public will end up paying them a grant or summink

[ringram]

More likely a way to get around Waitrose's contract limitations with Ocado!?
Seems Waitrose are none too pleased..

"Waitrose, which has already instructed lawyers over the deal given potential competition issues, said yesterday it had asked to see the detail of the contract to ensure there was no breach of its existing agreement.

“Once we’ve done that, we’ll decide what appropriate action to take,” a spokesman for Waitrose said."

[RYH64E]

Interesting article here http://www.telegraph.co.uk/finance/newsbysector/re...

A couple of quotes sum up the dilemma faced by the supermarkets.

on the one hand said:

The beauty of the self-service supermarket is that, following its creation in the 1950s, it shifted the costs of two of the most expensive aspects of grocery shopping – the collection of goods and their transportation back home – to the customer.

Internet retailing puts these costs back on the retailer, instantly putting pressure on profit margins.

but then again said:

Sainsbury’s and Tesco dominated the market by creating a more profitable business model than their rivals, and so too has Ocado, according to Steiner. This is because it can offer customers a bigger range of products without the huge costs of a supermarket estate, which includes rent, business rates and energy bills.

And the best quote of all, which I hadn't heard before:

Henry Ford said:

The idea that the most successful businesses are those which simply deliver what people want is misplaced. As Henry Ford said: “If I had asked people what they wanted, they would have said faster horses.”

[DonkeyApple]

ringram said:

More likely a way to get around Waitrose's contract limitations with Ocado!?
Seems Waitrose are none too pleased..

"Waitrose, which has already instructed lawyers over the deal given potential competition issues, said yesterday it had asked to see the detail of the contract to ensure there was no breach of its existing agreement.

“Once we’ve done that, we’ll decide what appropriate action to take,” a spokesman for Waitrose said."

Waitrose can hardly botch as they are rolling out their own delivery service to replace Ocado when the contract expires or at best negotiate out the profit margin.

[CoolHands]

DSLiverpool said:

On Friday, Ocado Group PLC (OCDO:LSE) closed at 108.30, 107.87% above the 52 week low of 52.10 set on Dec 22, 2011.
.


Had a tickle at 63p Im out now and staying out

886p today!!!

http://www.bbc.co.uk/news/business-44151028

[CoolHands]

CoolHands said:

They're still going! - and hiring IT 'experts' from poland. They say they are "preparing to open another in Dordon, Warwickshire, next year, but Mr Steiner said it was being held back by the limitations of IT resources".

& for general info current share price 116.60p

http://www.dailymail.co.uk/news/article-2143849/Br...

Share price now 1245p, 10 times what it was above. Boss just paid himself £58 million salary despite £214 million pound loss last year. Has it ever made any money yet?

https://www.dailymail.co.uk/news/article-7993005/O...

Edit it claims in the article below to have made a profit twice in 18 years, but I can’t find any other evidence of this so rather suspect it is not true. Perhaps they went into the black by a few pence at some point. “the value of Ocado is based very much on future earnings rather than today’s results.”

https://www.ft.com/content/c373765a-8407-11e8-a29d...

I wonder when that future will arrive

Edited by CoolHands on Tuesday 11th February 23:23

[Deep Thought]

CoolHands said:

Share price now 1245p, 10 times what it was above. Boss just paid himself £58 million salary despite £214 million pound loss last year. Has it ever made any money yet?

https://www.dailymail.co.uk/news/article-7993005/O...

Edit it claims in the article below to have made a profit twice in 18 years, but I can’t find any other evidence of this so rather suspect it is not true. Perhaps they went into the black by a few pence at some point. “the value of Ocado is based very much on future earnings rather than today’s results.”

https://www.ft.com/content/c373765a-8407-11e8-a29d...

I wonder when that future will arrive

Edited by CoolHands on Tuesday 11th February 23:23

Ocados share price is based on the type of company it is, its revenue, turnover, outlook etc. They've reinvented themselves as a Tech company, hence why they are more aligned with others in that sector rather than the likes of Sainsburys as a grocery retailer.

They've been making a relatively small profit in recent years but putting that back in to the business to fund the expansion of Ocado Technology.

This has now been spun off as a separate division, as has Ocado Retail. 50% of Ocado retail has been sold to Marks & Spencer for £750 million from memory. Ocado Group are using this to expand and innovate within Ocado Technology.

Ocado Tech now sell the capability to other companies and build and manage Customer Fulfillment Centres for them using their in house developed Ocado Smart Platform.

Share price of Ocado is now based on them being a Tech and innovation company rather than a grocery company, hence the jump.

Steiner is committed to increasing share price and value for shareholders. He is bonused on this. That is why he is able to take such a massive "salary" from the company - its based on share price increase not absolute profitability.

Share price has continued to increase based on the amount of CFCs they have "sold" to other companies - Groupe Casino, Krogers, Sobeys and Coles to name but a few. I think some 50 CFCs are committed to over the next 3-5 years.

There are favourable comparisons drawn with Amazon's fulfillment centres, of which Ocados CFCs appear faster and more automated.

https://www.youtube.com/watch?v=4DKrcpa8Z_E

They do most of their own tech still - they outsource the boring bits that dont interest them - but primarily its all in house. From what i've read they're one of Europe / the worlds (cant remember which but i think its the worlds) largest manufacterers of robots.

Future share price increase will be linked primarily to how many more big customers they can get on board and how many more CFCs they can build for them.

They are also looking at other ways to use the CFC technology such as for vertical farming.

So, no, i wouldnt be looking at profit margins as an indicator of where they have been / are going, just as you wouldnt look at Amazons profits.

[thepeoplespal]

Never thought they'd be worth what these figures are. How sick must DSL feel having bought at 63p and then sold out? I'd have done the same, if I'd had any money.