Equities Update: Ocado, Amazon, B&M…

Ocado narrows loss but issues remain

Adam Vettese, analyst at investment platform eToro says: “It’s been a tough year for Ocado shareholders, seeing the price get slashed by half as the firm contends with the grocery market’s stuttering post-pandemic recovery and high food inflation. Ocado kits out supermarkets worldwide with its fulfilment technology and quite simply the capacity has not been there for the anticipated number of centre openings as first predicted. This is leaving the firm burning cash, which is a situation that investors will want to see remedied promptly. The signs this morning are that investors sense progress as shares are up 17.

“The numbers do read better than expected, with a smaller than anticipated loss and guidance being raised, but this could well just be papering over the cracks of the overriding problem. There is evidence that the technology is improving efficiency and saving energy with the firm closing its oldest site in Hatfield and moving that capacity to the newer Luton facility. The global rollout is what is going to pay the bills though.”

Amazon Prime Day: investors gear up for one of the year’s biggest spending events

Sam North, analyst at investment platform eToro, says: “Whether you’re seeking great deals on the latest Barbie, L’Oreal, and Sony products, or you’re interested in Amazon’s share price and its impact on the broader market, Amazon Prime Day is an event to follow.

“For investors, Prime Day is more than just a sales event. It is a key sign of Amazon’s potential to increase customer spending and brand loyalty. As data from March revealed that 75% of US shoppers had Prime memberships, and Thursday’s CPI report showed that US inflation has cooled to its slowest pace in a year, Prime Day is set to be one of the year’s major shopping events besides Black Friday and Christmas.

“Prime Day generates considerable money for Amazon, with billions of dollars in sales. In 2023, Amazon Prime Day sales increased to $12.7 billion in the US alone (its best year ever). Exclusive deals also lure customers away from other retailers, maintaining Amazon’s dominance in the e-commerce space. This large inflow of revenue has the potential to improve investor confidence in Amazon’s financial health.

“Prime Day also acts as a showcase for Amazon’s diverse product offering and speedy shipping services. Last year, Amazon expedited over 7 billion items at record-breaking rates, ensuring same-day or next-day delivery for Prime members worldwide, including over 4 billion in the US. Such efficiency and member-only discounts not only attract new customers, but also confirms that the Prime subscription is worth it for its 180 million current members.”

B&M continue to expand despite revenues slowing as UK competition hots up

Mark Crouch, analyst at investment platform eToro, says: “B&M’s trading update is a bit of a mixed bag. A steady increase in revenues helped by higher volumes across its businesses indicates the discount retailer is on course to achieve cash generating growth across the full financial year. However, B&M’s UK like-for-like revenue was down 3.5%, with increasing competition throwing a spanner in the works. 

“B&M, who sell a wide range of household items, managed to capitalise during the cost-of-living crisis, offering household brands at cheaper prices as more consumers turned away from big name stores in pursuit of value. However, with inflation cooling in recent months, rivals are pushing back.

“Along with offering value, expansion has been the name of the game for B&M, and at a rapid pace. The company’s target of 45 new store openings in the year is on track with 19 currently being achieved, underlining B&M management’s determination to expand despite multiple headwinds facing the retail sector. Shareholder returns have been consistent which is a positive sign. However, the firm’s share price has fallen by a fifth this year so investors will hope this is not a warning signal that the company is expanding too quickly.”