Blog: Gloom descends on Ocado
Dean Best | 21 September 2011
"We now expect Ocado to lose money for at least the next two years." The words of one UK retail analyst today (21 September) amid speculation that Tesco is planning a major new offensive on price.
"It looks like the sector's big dirty secret is about to reveal itself. Market gossip suggests that Tesco is set to launch a significant price offensive next week," Panmure Gordon analyst Philip Dorgan said today. "Ocado is playing with the big boys now. Unfortunately, scale is a big advantage in food retailing, so we expect Tesco's planned price initiative to hurt Ocado disproportionately. We therefore now expect Ocado to lose money for at least the next two years."
Ocado's shares, which dropped by nearly 12% on Monday after it reported a slowdown in sales and said its margins would be lower than initially forecast, fell again today. At 15:40 UK, Ocado's stock was down 10.46% at 103.6p. Given that Ocado's shares closed on Friday at 133.7p, the stock has slid over 30% this week.
The retailer, which listed last summer, remains under scrutiny. Its third-quarter trading update on Monday worried investors and, despite the potential of the UK's online grocery sector, there are concerns that the company is set to face ever-growing competition.
Ocado has had a long-running "Tesco Price Match" campaign where it matches the UK's largest retailer on price on "all identical branded goods". Should Tesco launch a significant push on price in the coming days, Ocado stands to suffer. And, with the UK's Big Four looking to step up their online presence in different ways, it could be a taste of things to come.
We hear a lot in the food industry about two interconnected trends: and social media and “foodie” culture....
Nestle, set to welcome a new CEO on 1 January, has announced more changes to the make-up of its senior management team....
Blue Bell Creameries is trying to win back the trust of consumers after a fatal listeriosis outbreak last year was linked to its products - but in recent days the US ice cream maker has issued another...
The UK's competition regulator has given the all-clear to Hain Celestial's bid to buy UK food and beverage group Orchard House Foods, nine months after the US group announced the deal....
- General Mills on Q1, innovation, margins
- Interview: Mondelez's outlook for China
- Aryzta FY results, outlook for 2017 - 6 takeaways
- What next for Bernard Matthews? - comment
- Interview: Mondelez eyes sweet success in China
- ConAgra acquires Frontera Foods' "gourmet" brands
- Nestle close to finalising Garoto deal
- Nestle revamps foodservice arm
- Aryzta FY profits fall
- Nestle launches Nesquik Protein Plus for adults
- The Big 15: Strategies and Priorities of Top Packaged Food Players in Comparison
- Global Chocolate Confectionery Overview: Challenges, Opportunities and Risks
- Redefining Snacks: From Conventional Snacks to Snack Replacements
- Global Foodservice Market 2016-2020
- Constellation Brands, Inc. (STZ) - Financial and Strategic SWOT Analysis Review