Ocado Post Call: Delay in Delivery, Not in Direction – but New Contracts Crucial to Unlock the Investment Case

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Ocado Post Call: Delay in Delivery, Not in Direction – but New Contracts Crucial to Unlock the Investment Case

ment to contracted partnerships may also take years, extending the Specialist Sales contact details:

earnings/cash realisation timeline. We cut our target price to 245p (from 290p), but Scott Silver - Specialist Sales -

note that our revised valuation effectively implies c. 49 fewer incremental European TMT

modules, an outcome we continue to view as highly unlikely. (44-20) 7134-0412

scott.silver@jpmorgan.com

• Conference Call Highlights.1) Regarding ongoing discussions with Key Changes (FYE Nov)

prospective SBA partners, management noted that while some grocers are Prev Cur Δ

seeking an automated solution “imminently”, others also acknowledge the Adj. EPS - 26E (p) (37.78) (35.07) 7.2%

need for an automated online solution (given the capacity constraints from in- Adj. EPS - 27E (p) (27.56) (24.69) 10.4%

store picking) but are targeting a longer time frame (FY28-FY30). 2) With new Adj. EBITDA - 26E (£ mn) 213 198 -7.4%

Adj. EBITDA - 27E (£ mn) 288 273 -5.1%

CFCs going live in H2 (Busan & Tokyo 2) as well as the benefits of cost

reduction measures beginning to flow through, management expects a Style Exposure

meaningful improvement in the Tech Solutions margin in H2; 3) On the path

to delivering positive underlying cash flow, management outlined the people

and non-people savings (including office rationalisation, reduced contractor/

professional services spend, AI-driven efficiency, etc.) with most measures

implemented in H126; 4) Management noted Ocado Retail has been the UK’s

fastest growing grocer for 12 consecutive months and has shown strong

profitability improvements, with a 119% YoY increase in Adj. EBITDA. This