MIDAS SHARE TIPS: Percy Pig Will Supply For Ocado Backers As Online Grocery Connects With High Street Giant Marks & Spencer
In the darkest days of lockdown, scoring an Ocado delivery machine was almost as thrilling as winning the lottery. Six months later, even when most of us no longer want to kiss Pete the van driver when he shows up with the goods, we are still embracing online shopping at an unprecedented pace.
It is not surprising; When a brick-and-mortar supermarket has a mask and one-way system, meaning you can’t go back if you want an extra pint of milk, it’s tempting to have food delivered to your door instead.
And Ocado Group, which by law is a technology company rather than an online grocery store, has the systems to make that happen.
Secret weapon: Ocado put Percy Pigs on his vans to underscore his bond with Marks & Spencer
The company also has a new secret weapon in Percy Pig. The grunting gummy candy is the face of Marks & Spencer food, and Ocado is so thrilled by the new collaboration with the shopkeeper that it’s even rebranded some of its vans with photos of Percy and friends to celebrate.
Fears that shoppers would not be happy with Ocado’s new partner, who has replaced Waitrose, were allayed last week when the company released its third-quarter figures. They were impressive. Which company manages to achieve a 52 percent increase in sales during a global pandemic, and also increases the basket size per customer?
Right now, shoppers are spending an average of £ 141 per store at Ocado – down from total lockdown panic buy heights, but significantly higher than pre-pandemic nonetheless.
As a sign that the M&S goods available now are attractive to existing customers, they make up more of the average basket than Waitrose goods were before the change. That might be because of the novelty factor (there are only so many Percy Pigs anyone can buy, right?), But to analysts, it’s a relief that the M&S partnership has gone so well.
Ian Forrest, who backs the shares for The Share Center, says the “encouraging early signs are very positive for investors,” though he warns it is too early to make a final judgment.
Forrest also points out that despite all its focus on Ocado’s retail arm, it also has a service side. Ocado Solutions partners with existing supermarket chains around the world to help them shop online. It recently raised £ 1 billion in equity and debt to fund it, and its clients include Kroger in the US and Casino in France. Revenue from this can only be booked if the distribution warehouses it builds for customers are open, but it’s a good place to be as everyone is racing in ecommerce for the next lockdown.
Ocado is loss-making and expensive. That’s why it’s important to think of it as a technical stock rather than a supermarket chain. Shares hit record highs during this week’s update, closing at £ 28.17 from around £ 13 a year ago.
Midas Verdict: Ocado didn’t get it right on shutdown. Unable to scale up fast enough, it was forced to limit slots and disappoint customers. Many feared that M&S would not please loyal customers accustomed to their Waitrose products, causing uncertainty.
But right now, the Ocado formula is a winning formula. Internet messaging is growing and it is well placed to capture market share from rivals now that it has capacity. The stock is expensive and, as analysts point out, difficult to value because it is loss-making and has little to compare.
But with a stay-at-home winter on the way and the prospect of cold and wet lines outside shops unattractive, Pete’s appearance in the Percy Pig Van will be a welcome sight for many households. To buy.
Listed on: Main market Ticker: OCDO Contact: ocado.com or 0345 656 1234