Ocado’s share price is back where it started. Are its robots just too fancy?
That’s quite a stock market journey: from 180p at listing 15 years ago to the mighty heights of £29 during the locked-down Covid year of 2020 and now – oh dear – all the way back down to 180p.Welcome to Ocado, which looked like the future of grocery retailing once upon a time but now seems to be struggling to convince its most important customer of the virtues of robots and automation.There is no positive gloss to put on news that Kroger, the US supermarket chain, is closing three of its eight warehouses that use Ocado’s technology.Kroger was the client that put a rocket under the UK group’s share price in the first place in 2018 by signing a partnership deal.If Ocado could prove the worth of its kit in the world’s largest consumer market, went the bulls’ argument, valuation doubts would disappear.
In the event, the strain in the relationship has been showing for a while.But, when it came on Tuesday, the result of the US company’s review of its e-commerce operations was worse than feared from Ocado’s point of view.It wasn’t just the three closures, but also Kroger’s positive words about expanding its use of alternative delivery merchants – the likes of DoorDash, Instacart and Uber Eats.Therein lies the great philosophical divide in the world of online groceries.Ocado’s model is capital intensive and requires heavy investment in automated warehouses, state-of-the-art robots and refrigerated vans.
The other setup is cheap, cheerful and, at its crudest, involves picking the goods off the shelves in a regular store and getting them to the punters as fast as possible via people on bikes.In truth, there’s room for both approaches and others in between – but the debate has always been about how much room for each model.The crushing aspect of Kroger’s analysis is that it seems to be saying that Ocado’s high-spec formula works only in “higher-density” locations.Even then, it added it will be “monitoring the remaining facilities’ performance”.It is all a very long way from the original Kroger/Ocado vision of building 20 warehouses in the US.
Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionAttempting to whistle cheerfully, Ocado said it still “expects significant growth in the US market” – but, to state the obvious, it needs to explain how significant and how it’s supposed to happen.The only small consolation is that Ocado gets $250m (£190m) in compensation for the early closures.Sadly, a full-throated endorsement from Kroger would have been worth far more.Back in 2020, when the pandemic forced everyone to log on, Ocado co-founder and chief executive Tim Steiner crowed that “a dramatic and permanent shift towards online grocery shopping” was taking place.It sounded hubristic when he said it – and the prediction has not improved with time.
The UK operation, now a joint venture with Marks & Spencer, remains the fastest-growing grocery format on the home front,The customers love it,But the investment story for the shareholders – and the reason why the ultra-patient core group has remained loyal through the long loss-making years – has been about turning Ocado into a technology company,The eventual prize would be annuity-like revenues from licensing the proprietary technology to supermarkets around the globe,Ocado has other overseas customers, but Kroger was the most important in the expansionary story.
The closure of warehouses in Maryland, Wisconsin and Florida on financial grounds is “a smelling salt moment” for the group, argued arch-Ocado bear Clive Black of Shore Capital.It’s hard to disagree.Steiner needs to address the burning question: is Ocado’s engineering so good and so state-of-the-art that it’s too expensive for mass adoption?
Jake Paul’s Joshua fight is all about fame and bluster, money and eyeballs | Jonathan Liew
“If it’s all straight up and proper, you would worry that he takes this kid’s head off,” reckons Barry McGuigan. “Could get his jaw broke, his head smashed in, side of his head caved in, God forbid he could get a brain bleed,” says Carl Froch on his YouTube channel. “It could be the end of him. It could be his last day on Earth,” David Haye tells Sky News, with the sort of apocalyptic glare I try to give my children when they want to jump in a muddy puddle.Yes, this week everyone appears to be deeply concerned for the wellbeing of 28-year-old YouTube celebrity Jake Paul
The Spin | Stokes’ England have reminded us all that cricket is meant to be fun
Nobody talks about the last ball of the Ashes. It’s the first that’s famous. That wide that flies to slip, that cover drive for four, that wicket, bowled him! Last balls? I had to look them up. Moeen Ali slicing a drive behind to finish an innings defeat in a dead rubber in 2015; Boyd Rankin being taken at slip off Ryan Harris, Rankin playing in his one and only Test at the fag-end of a 30-over collapse in a 5-0 whitewash that’s been full of them in 2014; a Steve Harmison bouncer ricocheting away off Justin Langer’s shoulder for four leg byes, the only four Australia score in a run chase they’ll never get to make in 2005.It’s the difference between wondering how things will go, and knowing how they do
Starc says Australia players upset at Ashes opener’s move from ‘Gabbatoir’ to Perth
Mitchell Starc has admitted that Australia’s players are upset at the decision to shift the opening Ashes Test from its traditional home of Brisbane’s Gabba – nicknamed “the Gabbatoir” because of its reputation as the graveyard of touring sides, and a ground where England have won just two of their last 20 games dating back to 1946 – to Perth Stadium.Asked whether his side could expect to enjoy a similar advantage at the first Test’s new venue, Starc said: “We’ll find out in a week, won’t we? They don’t listen to the players, we would have liked to start in Brisbane, too.”England’s Gus Atkinson said that though “there are no scars for me” from his country’s previous failures in Brisbane given he is a first-time Ashes tourist, “history would say it’s probably a good thing we’re not starting at the Gabba”.But Isaac McDonald, chief curator at Perth Stadium, defended the decision, saying that the city’s relative proximity to England makes it a sensible first stop, and adding that he is enjoying the extra attention that comes with hosting the first game of a marquee series.“We’ve actually opened the last four summers here,” McDonald said
The NFL says Jameis Winston is a ‘national treasure’. The NFL is very wrong
Hear the term “national treasure” and odds are you think of someone like Dolly Parton, Betty White, Simone Biles or Tom Hanks. They are comforting, widely admired and have uncontroversial histories.And then there’s Jameis Winston.To celebrate Winston getting the call as the New York Giants starting quarterback last weekend, the NFL created a hype video, splicing a bunch of his goofiest quotes during his meandering journey through various NFL teams. It also, somewhat dubiously, accompanied the video with a comment calling him “a national treasure”
Shoaib Bashir a surprise inclusion in England squad for first Ashes Test
England have hedged their bets two days out from the start of the Ashes by naming a 12-man squad for the first Test, with Shoaib Bashir a surprise inclusion.The 22-year-old’s addition suggests the tourists will wait until morning of the first Test before deciding whether conditions at Perth Stadium would suit four seamers or the addition of a spin bowler.Jofra Archer and Mark Wood are both in the 12-man selection, indicating that there are no doubts about either pace bowler’s fitness. Gus Atkinson and Brydon Carse complete the bowling group, with the latter most likely to miss out should Bashir make the starting XI.Brendon McCullum, the England coach, had been expected to opt for an all-seam attack on a ground that has hosted five previous Tests – two against India and one against each of New Zealand, Pakistan and the West Indies – in which 134 wickets have fallen to pace bowling and only 40 to spin
Booker prize winners, rap hits and Ryder Cups: interpreting the Ashes omens
History shows that surprisingly random factors can have an impact on whether England or Australia lift the urnContrary to what you may have read in some other publications, Josh Hazlewood’s hamstring injury is a massive boost to Australia’s hopes of victory in the first Test in Perth. The 34-year-old, you see, has proven beyond all doubt over an 11-year international career that he is a terrible hindrance to his team.Since the Tamworth-born terror made his Test debut in December 2014 he has played in 76 of Australia’s 107 Tests, of which they have won 39 (51%), while losing 24 (32%). Decent numbers, but it’s when you strip him from the side that they really thrive, with 22 wins (71%) and just five defeats (16%) in 31 games. His impact in the Ashes, if anything, is even more damaging: they have won 50% and lost 33% of their 18 games with him, but won 71% and lost just 14%, a single rogue game, of their seven without his malign presence
Cloudflare outage causes error messages across the internet
Amazon vs Perplexity: the AI agent war has arrived
Crypto market sheds more than $1tn in six weeks amid fears of tech bubble
‘Fear really drives him’: is Alex Karp of Palantir the world’s scariest CEO?
Don’t blindly trust everything AI tools say, warns Alphabet boss
UK consumers warned over AI chatbots giving inaccurate financial advice