Ocado shares break to new recent highs after H1

This is offset by depreciation and amortisation and exceptional items to give a loss before tax of £289mln. There were nonetheless operational efficiencies and lower support costs which helped shares and have led the business to suggest that full-year guidance is unchanged.

(Video Transcript)

Ocado

The retailer and logistics company Ocado has been one of the big upside movers in today's trade. We've seen numbers coming through for the first half of the year, and the company says it's on track for full-year guidance as already explained to the market. But we've seen a return to profit. Let's take a look at the numbers that we saw coming through from Ocado in this trading update.

EBIDTA

It said that the underlying measure of earnings hit £16.6 million for the first half, up from losses of 13.6 million this time last year. And the loss before tax was 289.5 million. That's at the pretax level. But the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBIDTA) came through with 16.6 million revenues, up a small touch at 1.37 billion. As I said, the full-year guidance is unchanged.

Marks & Spencer

One of the underlying problems is that the online supermarket giant's partnership with Marks & Spencer is showing some signs of tension. According to some reports, And the business does have this 50/50 joint venture to supply Marks and Spencer goods.

Let's take a look at the overall effect of what's happened. I think the MSA tension story has certainly been shunted into the background. Look at this rise we see in the shares today—a big, solid, strong, solid candle on the way up. And if you look at these figures as to where we are, we are currently trading at levels not seen since the 10th of February 2023, and we are up some 96% from the lows that we had at the beginning of June this year.

Moving average

So, it's been a really positive swing to accommodate shares. I am wondering whether perhaps they went a little bit too far on the upside today. I was talking about a potential long trade with the stock losing just below the 200-day moving average down to the 550 pence level. And here we are now at 660 pence.

I would certainly lock in and probably lock out all my profits now and just make sure I bag those profits. I'm not completely convinced there are much higher levels to go from this point on because the good news is already out there. And as I said, the longer-term tension story with Mark's expenses is certainly going to be something I'm going to be watching.