Ocado - comment

Ocado Retail (the JV between Ocado and M&S) released a trading statement highlighting an increase in number of customers but lower frequency and lower basket size in Q4 (13 weeks to November 27th). Reiterate this is for Ocado Retail only, but they confirmed their guidance for break-even EBITDA for the y/e November 22, and expect a marginal positive EBITDA in 2023. It is likely to be EBITDA negative in H1 and positive in H2, reflecting the volume growth numbers.

Management refused to indicate any probability on the contingent payment potentially due from M&S to Ocado (c.£190.7m) which is dependent on a specific target level of earnings in FY23. This payment is not included in our model. The only other point of note was Ocado retail management highlighting that the Kantar data over Christmas slightly overstates their performance.

Full Year Ocado Group results not due until 28th February.