Tim Steiner's impending departure as CEO of FTSE 250 company Ocado has sparked concerns among investors, amid a backdrop of boardroom tensions and a struggling share price that has plummeted by 90% over the last five years. The online grocery and automation firm's chairman Adam Warby appears to have won out in his bid to see Steiner exit the executive role by December 2027, with the co-founder set to transition into a 'founder' position.
Ocado's half-year results reveal a stark picture of challenges facing the business. Pre-tax earnings plunged by 90% to £17 million for the six months ending May, despite revenue increasing by 54% to reach a respectable £1 billion. However, this growth was largely driven by one-off payments, with £354 million stemming from compensation and accelerated fees following the closure of four warehouses operated in partnership with North American retailers Kroger and Sobeys. When excluding these special cases, Ocado's core technology services business reported a 66% decline in revenue to £14 million, underscoring difficulties in securing new contracts for its automation technology.
Contrastingly, the company's joint venture with Marks & Spencer exhibited more promising performance. Revenue rose by 15% to £1.8 billion, while market share expanded to 13.7%. The retail arm also returned to profitability, generating a pre-tax profit of £12 million for the six months ending April – an improvement from a £17 million loss in the same period last year. This growth was attributed to increased active customers (now up by 10%) and a higher average shopping basket value (£126.55) rising by 2%.
Analysts are divided on Ocado's prospects, with some – such as Duncan Ferris from Freetrade – highlighting the success of the M&S partnership while expressing concerns over the underlying performance of the company's technology division. Ocado is actively seeking new partners for its grocery warehouse services in North America, Europe and Asia, acknowledging a need to secure additional contracts to drive future growth. The boardroom tensions and mixed financial results have weighed heavily on investor confidence, leading to a 7% fall in Ocado shares to 165p at Thursday's market open.