Ocado Group boss Tim Steiner was in high spirits this morning after the business he founded posted a strong set of results for the first half of the year.
Steiner will be hoping that today’s results can change the doom-laden narrative around Ocado that has persisted this year. Ocado has been beset by questions over its performance, both domestically and internationally, and its share price has taken a battering to the point where it slipped out of the blue-chip FTSE100 index earlier in the summer.
The Ocado boss will hope that today’s half-year results can put some of those concerns to bed. The pureplay grocer reported revenues of £1.5bn to June 2, shrinking of pre-tax losses to £154m and a 329% leap in adjusted EBITDA to £71.2m.
Here’s what Steiner had to say about the retailer’s ongoing rift with M&S, the rollout of Ocado CFCs with its international partners, the collapse of quick commerce rivals like Getir in the UK, and whether he’s dreaming of swapping the City for a listing on Nasdaq in New York.
What’s the latest with Ocado’s ongoing dispute with Marks & Spencer?
“Just a quick word around the joint venture with Marks & Spencer, as I know many people will be keen to hear the latest on the diverse consideration payment. We continue to engage constructively with our colleagues at M&S, but I’m sure you can appreciate these discussions are confidential and I won’t be providing any further details.”
You’ve said today that Ocado is working with its international customers to ‘ensure that growth targets reflect the changing market environment’. Does that mean we could see more delays to the rollout of CFCs?
“When we first started these partnerships, we were very focused on warehouse and delivery operations. As we’ve worked more closely with our partners, and with them for longer, what we’ve both learned together is that there are other aspects of online grocery retailing that are different to what they’ve experienced in their in-store retailing.
“So, we’re helping them across multiple fields, including supply chains, their merchandising and promotional strategies online, but also with their acquisition and retention strategies for new customers or for new shoppers.
“We have no expectations of any of the projects that have been announced previously being delayed or deferred.”
With the likes of Getir and Gorillas pulling out of the UK, what’s the future for Ocado Zoom?
“I do still think that there’s a demand for ultra-fast delivery services. I think the point I raised at the time, when these businesses were starting, was that while there was demand for them, delivering that kind of service to shoppers comes at a price premium.
“It’s the same way that petrol forecourts and convenience stores come at a price premium compared to the discounter supermarkets and, as a result, aren’t the main channel in the UK grocery market.
“Gorillas said that they were going to be bigger than Ocado Retail by the first half of 2022 and I don’t think that they got much beyond 2% of Ocado Retail’s size by the time they exited the market. There were ludicrous statements being made and a view that all groceries were going to be sold in baskets of three or four items, with people taking multiple deliveries a day.
“I do think that there’s a very exciting potential future globally for the Zoom product. But we’ve probably got another 12 to 18 months of development to really make it the product I’d like to see, to make it work really brilliantly.”
How do you see the London stock market at the moment and are there any plans to list in New York?
“I think the London market can be tough for some companies. Obviously, we’ve got a very strong retail presence here in the UK with Ocado Retail and it’s a natural place for that business to be listed.
“On New York specifically, it’s a topic that’s been raised by a number of other parties, but it’s not something that we’re currently working on.
“Could we consider other markets? We could, but we’re actually really focused at the moment on serving our clients well, helping them to serve their shoppers well, and focusing on the improving financials that we’ve seen this morning.
“It’s on those efforts that we’re really focusing our time, not on where we are and aren’t listed.”
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