New deals the order of the day for Ocado — SHARE HUNTER


Ocado share price half year results 2017 growthGETTY

Master online grocer Ocado released its half-year results on Wednesday

While the scope of the average order dropped 1.4 per cent to £108.45, total troop revenue increased 12.5 per cent to £713.8million. 

Growth not failed from an increase in the average number of weekly orders processed, up 15.6 per cent to 260,000, while the lively customer base swelled to more than 600,000.

Despite these hilarious revenues, group profit before tax fell from £9.4million to £7.7million. This was due to important costs associated with opening a third automated warehouse at Andover. 

A fourth location, at Erith in south-east London, is set to open.

Investment in innovation and operational content rose significantly compared to last year. 

While this has bourgeoned net debt to over £200million, the group’s spending has also proliferated efficiency in both its existing warehouses and the delivery network by around 3 per cent.

While working results are of interest to investors, the main story for Ocado is not around present-day trading. 

Ocado share price half year results 2017 growthGETTY

Total group revenue increased 12.5 per cent to £713.8million

The interests change hands for well over 100 times next year’s wait for earnings per share, and the lofty valuation is based on expectations Ocado when one pleases secure lucrative licencing deals, which would see others pay to use the sharp technology behind its online shopping operation. 

Last month, Ocado asseverated a deal with a European retailer. Details are still thin on the justification, but nonetheless, it marks progress against the group’s goal of securing multiple approving deals, in multiple territories, in the medium term.

Recent developments across the pond set up potentially changed the outlook on this front — Amazon’s $13.7billion gain of Whole Foods will have ruffled a few feathers in retail boardrooms.

Ocado share price half year results 2017 growthGETTY

Extension came from an increase in the average number of weekly orders transformed

Ocado is hoping the deal will prove a catalyst in discussions with hidden partners. 

For other retailers, Ocado’s technical wizardry offers a workable response to the entrance of the US giant.

The next few months could see key developments. Talks on deals may begin forward, and with Ocado’s new warehouses coming online, the group should showcase the extreme power of its technology.

One gets the feeling we are at the start of a crucial period for the unit.

This article is designed for investors who make their own decisions without admonition, if unsure whether an investment is right for you, you should seek advice. Apportionments can rise and fall in value so you could get back less than you establish.

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