|Bid||2,010.00 x 0|
|Ask||2,011.00 x 0|
|Day's Range||1,988.00 - 2,030.00|
|52 Week Range||994.01 - 2,249.00|
|Beta (5Y Monthly)||1.06|
|PE Ratio (TTM)||N/A|
|Earnings Date||Jul 14, 2020|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||985.69|
Monkey labour to harvest coconuts for commercial products "is almost non-existent" in Thailand, the commerce minister said on Monday, after British retailers announced bans on products campaigners say use the animals in their production. Waitrose, Co-op, Boots and Ocado vowed not to sell products that used monkey labour, while Morrisons has already removed Thai products amid an appeal by Prime Minister Boris Johnson's fiancée Carrie Symonds. Symonds on Friday backed a call to supermarkets to stop selling Thai coconut products over accusations of monkey "slaves" by the rights group People for Ethical Treatment of Animals (PETA) published in the Telegraph newspaper.
The future of grocery shopping will involve shopping from home using virtual reality headsets and deliveries via drones and self-driving cars, according to this banker.
(Bloomberg Opinion) -- Covid-19-related lockdowns have ushered in plenty of consumer behaviors that I don’t expect to last, including cutting one’s own hair and baking enough homemade bread to spark a run on yeast. But there’s at least one spending shift brought on by the pandemic that is bound to be quite sticky: buying groceries online. Many shoppers tried this format for the first time in the past several months, and there’s good reason to believe they won’t give it up. It’s a dynamic that will further strengthen retail heavyweights Walmart Inc., Target Corp. and Costco Wholesale Corp., while putting more pressure on traditional grocery chains.Nearly half of respondents in a survey by Coresight Research reported trying online grocery shopping for the first time or increasing their use of it because of the novel coronavirus. Importantly, the study was conducted March 17-18, when state and local stay-home mandates were just starting to take effect. It stands to reason, then, that even more consumers may have been pushed in this direction later. I’ve always thought it was revealing that Walmart and Target have long said their curbside pickup services have unusually high net promoter scores, a commonly used industry metric that is a proxy for customer satisfaction. In other words, once people try these services, they tend to really like them. The hard part is getting them to take the initial plunge. The pandemic just provided shoppers a forceful reason to do just that. Target, for example, has said that 2 million people used its drive-up service for the first time in the first quarter.(1) Sales to the retailer fulfilled by its grocery-centric same-day delivery service, Shipt, were up more than 300% in the quarter from a year earlier. U.S. shoppers have tended to eschew online grocery shopping because they want to squeeze their peaches and nab that just-perfectly-sized steak. But this unusual moment will make some of them realize just how much of their typical grocery haul is comprised of replenishment-type items that are, in fact, easy to hand off to someone else. After all, a box of Cheez-Its or a pint of Ben & Jerry’s tastes the same no matter who selects them. Also, retailers and services such as Instacart have fine-tuned their app experiences so it’s generally very easy to reorder favorite items after you’ve done it once. These factors, I expect, will drive a sharp increase in e-commerce penetration of a corner of retail that has remained relatively insulated from digital change. Walmart and Target, two retailers that already have shown themselves to be holding up well amid the pandemic, stand to benefit from this shift. Both long ago realized that online grocery was going to be key to avoiding further wounds from Amazon.com Inc. and invested accordingly. Walmart has hired tens of thousands of workers who focus on filling these orders; Target acquired Shipt to help it gain and protect grocery market share. If both these chains can also convince customers to add higher-margin items such as apparel and home goods to these orders, that could help make them more lucrative. Costco, which recorded booming online grocery sales in the latest quarter, also showed potential to emerge from the lockdown phase with a large group of digital converts. When Kroger Co. reports earnings later this week, we’ll see to what extent the supermarket giant’s online business got a boost from shoppers under stay-at-home orders. The cornerstone of Kroger’s e-commerce strategy — a partnership with Britain’s Ocado Group Plc that will bring that company’s technology to the U.S. — is one that, by design, won’t bear fruit for a long time. That doesn’t leave me particularly confident in the company’s positioning for winning digital dollars right now.It’s unclear what a stronger uptake of online grocery shopping means for Amazon. Bloomberg Opinion has frequently noted that Amazon’s strategy around the grocery business seems as ill-defined as the day exactly three years ago that it plunked down $13.7 billion for Whole Foods Market. According to the Coresight survey, far more consumers have bought groceries recently with Amazon than with any other retailer, an encouraging sign for the Seattle shopping juggernaut. The problem is, its base of shoppers is not growing much, even as some of its competitors see huge gains on that measure. The real losers from the swing toward digital grocery shopping are likely to be the regional grocery chains such as Ingles Markets Inc. or Publix that have already suffered in recent years as customers have shifted their grocery dollars away from supermarkets to warehouse clubs, discounters such as Aldi or even Dollar General Corp. Smaller, traditional grocers simply don’t have the massive capital-expenditures budgets and talent pool of their larger competitors that could help them hold their own in the digital realm. In this way, the rise of online grocery shopping will help strengthen the retailers already in the winner’s circle and may accelerate the demise of others.(1) Curbside pickup is available at Target for non-grocery purchases, too, so not all of these new customers necessarily bought food.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- One of the talents of Tim Steiner, chief executive officer of Ocado Group Plc, is knowing how to negotiate from a position of strength.Over the past decade, the U.K.-based trailblazer for online grocery sales has been able to clinch contracts with British food retailers Wm Morrison Supermarkets Plc and Marks & Spencer Group Plc, offering digital capabilities just when they were most desperate to expand online. Now Steiner is again living up to form, as he raised 1 billion pounds ($1.3 billion) this week. The move exploited a soaring share price, a big increase in online grocery orders and a shortage of investment opportunities in the convertible bond market. Quite a feat for a company that has made a pre-tax profit in only a handful of its 20 years of operation.The capital raising is certainly opportunistic. Ocado already had about 1.2 billion pounds in the bank. The excitement around online shopping has also elevated Ocado’s share price, from around 13 pounds at the start of the year to more than 20 pounds before the fundraising announced late Wednesday. The company is right to take advantage of these factors while it can, because they may not be around forever.Steiner clearly thinks there are more gains to be wrung out of the post-pandemic retail landscape. Mindful of the accelerating switch from buying food in stores to simply clicking a mouse or tapping on a smartphone, its online partners around the world, such as U.S. grocer Kroger Co., may want to attack the online grocery market even faster. Ocado also anticipates a surge of interest from other big international supermarkets wanting to use its automated warehouses.Ocado raised 657 million pounds by selling a roughly 5% stake in itself at a 6% discount to Wednesday’s closing price. The rest of the windfall came from selling bonds that will convert into stock if the share price hits 26.46 pounds a piece — more than one-third above where the shares are now. The deal effectively offers Ocado the chance to raise equity at a higher price in the future, minimizing dilution for shareholders.But investors should be aware of another Ocado trait: plowing money into expensive infrastructure with little to show for it by way of returns.Since 2000, Ocado has invested about 1.4 billion pounds in its retail business, according to Mike Dennis, an analyst at Bloomberg Intelligence. But since going public in 2010, it has made a cumulative operating profit of only about 100 million pounds from this division, which is now a joint venture with Marks & Spencer.The company’s thesis has been that more grocery shopping will soon shift away from physical supermarkets and take place online instead. It also believes that relying on big state-of-the art warehouses and robots to fulfill orders is a far more efficient approach than stocking store shelves.It’s right on the first point. Online’s share of food shopping has almost doubled in the U.K. in recent months, according to Nielsen, from 7% before the pandemic to 13% in May. The second point is not as certain. The trouble with Ocado’s model is it needs expensive infrastructure. The more sales grow, the more warehouses and robots are required. As I have pointed out before, stores with employees are more flexible: They don’t need to add huge distribution centers or install whizzy technology — both of which are costly and time-consuming — to scale up. Employees in existing supermarkets can simply pluck more toilet rolls or cans of beans off of their shelves and put them into crates. Ocado’s need for capital gets even more acute when it agrees to operate the online grocery businesses of big international retailers, such as Japan’s Aeon Co., with whom it struck a deal late last year. While these contracts should eventually generate lucrative fee income, they entail a substantial upfront capital cost. The company’s fundraising has preempted a possible spate of new agreements with grocers around the world, tantalized by the prospect of more online shopping, and put an extra billion pounds into its coffers. If Steiner doesn’t use this wisely, he won’t be able to win over shareholders so easily next time around. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
U.K. grocer Ocado raised more than £1 billion on Wednesday to capitalize on a boom in demand for online groceries caused by coronavirus. It will use the funds to develop its worldwide network of online grocery warehouses.
Ocado, the British online supermarket and technology group, plans to raise 1 billion pounds ($1.3 billion), giving it more firepower to capitalise on the rapid growth of the online grocery market triggered by the coronavirus crisis. "This capital raise gives Ocado Group the opportunity to accelerate our role in creating sustainable change in the industry, allowing us the flexibility to move at increased pace and capitalise on the full opportunity set over the medium term," CEO and founder Tim Steiner said. Ocado said globally, online grocery penetration is currently low with significant scope for expansion.
Grocery and drugstore chain Kroger (NYSE: KR) revealed its plans to build a trio of new Customer Fulfillment Centers (CFCs) across the U.S. to support the company's online business. The distribution centers will stand in the Great Lakes, West, and Pacific Northwest areas. CEO Luke Jenson of Ocado Group (LSE: OCDO), its partner in the project, says this is part of Kroger "building an e-commerce ecosystem across the U.S. that will deliver unrivaled online experiences to more customers, in more ways and in more markets."
The Kroger Family of Companies (NYSE: KR), America's largest grocery retailer, and Ocado (LSE: OCDO), a world leader in technology for grocery ecommerce, today announced the continued expansion of their partnership with plans to construct three new Customer Fulfillment Centers (CFC) in the Great Lakes, Pacific Northwest and West regions.
As countries easing lockdowns bring businesses and workers back online, these tech solutions are popping up to make sure people keep up social distancing
Ocado stock surged to all-time highs on Wednesday as the U.K. online grocer said retail revenues were up 40% since the start of April.
The robots in Ocado warehouses have never been busier. Sales at the British-based online grocer soared by just over 40 percent year-on-year in the second quarter. The jump came as its home market went into lockdown. Ocado was forced to block new registrations and impose a queue system after web traffic surged by hundreds of percent. The company says it took a few weeks to adapt, and admits service standards suffered for a while. It has increased its delivery capacity by about 40% in response. And its high-tech warehouses are running at maximum output. But the firms says it can only do so much to meet demand. Pre-crisis, about 7% of UK grocery sales were delivered. Tesco and the country’s other big supermarkets have all been ramping up capacity to meet the rising demand. But even if delivery capacity doubles, that still leaves about 85% of grocery shopping being served by bricks-and-mortar stores. Now Ocado says there are signs that shopping habits are returning to normal. But it expects the shift to online grocery shopping to keep accelerating, even after the current crisis ends.
British online supermarket Ocado has seen retail revenue soar 40.4% year-on-year in its second quarter to date as it ramped up capacity to meet unprecedented demand during the country's coronavirus lockdown. Britain has been on lockdown since March 23, but Prime Minister Boris Johnson has said the country is past the peak of the pandemic and is expected to set out a plan on Sunday on how it might gradually ease restrictions. In March, Ocado was forced to stop registrations from new customers and impose a queuing system online after it saw a several hundred percentage increase in web traffic.
Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Ocado Group plc and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. Since 1 January 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion.
The stock market's big rebound keeps on climbing, which has been great news for investors, and the stocks I've been telling readers about since mid-March. I continue to expect great results from these investments over the coming months. But at the same time, I expect the road ahead will be a bumpy one, full of periodic setbacks.Source: Shutterstock As this zigzag action plays out over time, the best stocks will progress higher. But many others will not.We are seeing this divergence play out in real time, as investments such as the so-called "shelter in place" stocks are rising or even hitting new all-time highs, while stocks heavily exposed to brick-and-mortar retail struggle to gain any ground whatsoever. And I expect these divergences to persist for a long time.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMany retailers have suffered life-threatening financial trauma that will send them into bankruptcy. Meanwhile, a workforce with 20% unemployment is unlikely to rush back to shopping malls, even if the virus suddenly posed zero threat to their health. * 9 Healthcare Stocks to Buy Even After the Coronavirus Fades In other words, brick-and-mortar retail now faces even greater challenges than what it had been over the past few years.In today's report, I'll go over why brick-and-mortar retail will continue to fail, even if the coronavirus epidemic ends tomorrow. I'll show you three retail stocks that are beating the odds. And I'll show you how to go about betting on the ongoing "retail apocalypse"… "Going the Way of the Woolly Mammoth"Over the past 10 years, online retail sales growth has outpaced non-online retail sales growth in the U.S. by 7 to 1, more than doubling as a percentage of total retail sales.The "Amazon-ification of commerce" has crushed the brick-and-mortar retailing industry from coast to coast.Amazon (NASDAQ:AMZN) just hired hundreds of thousands of new workers during a period when millions of Americans filed for unemployment. And on the other side of the epidemic, a large percentage of folks who have boosted their online shopping activity will maintain a higher level of online commercial activity than they did before the epidemic.Clearly, Amazon is a net winner from the crisis -- as it always seems to be.But Amazon and Covid-19 aren't the only destroyers of conventional retailing.Some retailers like Lululemon Athletica (NASDAQ:LULU) have developed robust online sales channels to complement their select brick-and-mortar locations. This "omnichannel" approach is producing great success for a few savvy retailers.And Kroger (NYSE:KR) is demonstrating an impressive level of flexibility and innovation to revive its fortunes. The company's forward-looking team-up with Ocado Group PLC (OTCMKTS:OCDGF) to build robotic grocery warehouses around the country demonstrates its ambitious efforts to get out in front of changing consumer buying habits.But most brick-and-mortar retailers are failing to innovate. As a result, they are sinking slowly into irrelevance. These stores are going the way of the woolly mammoth.In 2019 alone, an estimated 12,000 retail stores closed. And the tally of store closures continues to grow by the day. Investment bank UBS estimates that U.S. retailers will shutter another 75,000 physical stores by 2026.Many leading retailers are showing a drop in revenue, while the very best companies are producing negligible revenue growth. Meanwhile, debt loads are soaring. These negative trends are weighing on stock prices throughout the retail sector.Source: Chart by InvestorPlace Although this downtrend is well established, it shows no sign of stabilizing or reversing. To the contrary, the sector continues to exhibit market-lagging performance. A Way to "Short Sell" Dead MallsLong before the coronavirus hit, e-commerce was growing rapidly worldwide. That's hardly a secret.According to Statista, retail e-commerce sales worldwide totaled $3.46 trillion in 2019 - nearly double the 2016 tally. And e-commerce volumes are on track to soar another 8.5% over the next three years, according to eMarketer.com.As online retailing gains momentum, it is taking a very visible bite out of traditional brick-and-mortar retailing. That's no secret either.Source: Chart by InvestorPlace Still, e-commerce represents less than 15% of total U.S. retail sales. That share is similar to the percentages worldwide.But e-commerce isn't just about destroying the old ways of retailing and taking market share. It is about establishing an entirely new mode of commerce.That's a big reason why "big box" retailers have been struggling for many years. Sears, Blockbuster, RadioShack, Circuit City, Borders, Sports Authority, and Toys "R" Us have all gone to retail heaven (or are almost there).Even before the coronavirus, many "best of breed" retailers were struggling to compete. During the last three years, revenues at Walmart (NYSE:WMT) have grown a meager 7%, while Amazon's have doubled.The coronavirus is supercharging this trend.That's why I recently recommended that members of Fry's Investment Report reestablish a position in an investment that allows them to bet against brick-and-mortar retail… and on the retail apocalypse.I first recommended this hedge trade back on Feb. 6. Less than two months later, as the stock market was cratering, we closed out that position for a gain of 43.8%.But I think this investment has further to go. After all, a rallying stock market does not change the fact that brick-and-mortar retail is facing a world of hurt.You can find out all about it by joining us here.If my analysis is correct, this investment will be a solid winner in a falling market, or a worthwhile hedge in a rising one.Regards,Eric FryP.S. Opportunities for extraordinary gains exist in any market, bullish or bearish. Some of the best stock traders in U.S. history made fortunes because of big moves they made while others sat on the sidelines during turbulent times. And I believe there are four companies you must buy right away to capture the biggest gains in the market going forward.You probably haven't heard of a single one of these firms… but I hope you'll listen. To date, I've found 40 investment opportunities in which folks could have made 1,000% gains or more following my recommendations. Check out my new presentation on what to buy now here.Eric Fry is an award-winning stock picker with numerous "10-bagger" calls -- in good markets AND bad. How? By finding potent global megatrends … before they take off. And when it comes to bear markets, you'll want to have his "blueprint" in hand before stocks go south. Eric does not own the aforementioned securities. More From InvestorPlace * America's 1 Stock Picker Reveals Next 1,000% Winner * 25 Stocks You Should Sell Immediately * 1 Under-the-Radar 5G Stock to Buy Now * The 1 Stock All Retirees Must Own The post Betting On Retail Stocks At the End of the Brick-And-Mortar World appeared first on InvestorPlace.
Activision Blizzard (NASDAQ:ATVI) stock has long been one of the best ways to profit from the rise of the video gaming industry. And that trend is enjoying a huge acceleration now.Source: madamF / Shutterstock.com In fact, thanks to the novel coronavirus, investors have been flocking into the so-called "SIP trades." These are the stocks that are most likely to benefit from the "shelter in place" orders in the United States and around the world.A few high-profile examples of SIP stocks include:InvestorPlace - Stock Market News, Stock Advice & Trading Tips * Amazon (NASDAQ:AMZN), the online shopping titan. * Peloton Interactive (NASDAQ:PTON), the vendor of premium stationary exercise bikes. * Electronic Arts (NASDAQ:EA), publisher and distributor of video games. * Ocado Group (OTCMKTS:OCDGF), a pioneer of robotic logistics and home grocery delivery. * Netflix (NASDAQ:NFLX), the leading subscription video streaming company. * 30 Consumer Stocks to Buy Once the Coronavirus Pandemic Passes All five of these stocks share one enviable feature: They hit new all-time highs over the past week! Activision has not yet reached a new all-time high, but I expect it to do so before the year is out. That's because it benefits from the same desirable traits as these other five winning stocks. Already, Activision's shares have been heating up, and they should have more room to run in coming weeks and months. eSports Are BoomingOne year ago, I pinpointed a trend I believed would fuel a powerful, long-term investment opportunity. I called it the "Screen Time Megatrend," and highlighted the video gaming and eSports industry as one main beneficiary.Already, eSports have become increasingly well-known as a popular emerging pastime. Wealthy investors have plowed hundreds of millions of dollars into creating professional leagues around various video games. Cable TV channels have covered some of the bigger matches. Young gamers are making serious money, and it's become a real alternative to traditional sports. Even prior to the coronavirus and the ensuing shutdown of other professional sports for 2020, eSports were shaping up as a power player.Industry analysts expect a slight dip in eSports' momentum, at least on a professional level, due to the virus. Newzoo, for example, trimmed its eSports revenue estimate for 2020 from $1.1 billion to $1.05 billion as some live events have been canceled. However, the vast majority of the industry's events should proceed as planned.That's light-years ahead of other professional leagues, which risk seeing most of their revenues wiped out entirely for 2020 if they can't get games going again. And Newzoo doesn't expect the virus to affect eSports' long-term future; they see the eSports industry's revenues rising to $1.6 billion in 2023, making for a 50% gain in just three years. The Shelter-in-Place MegatrendThe coronavirus epidemic is supercharging the rise of video gaming and eSports. That's the main reason I'm excited about Activision. Gaming was already on a major growth spurt even before the coronavirus hit. Now with everyone cooped up at home, companies like Activision are having a fantastic opportunity to establish new traditions and habits with users. And it's not just young people gravitating to video games either; many adults are getting in on the fun as well.The "Screen Time Megatrend" I started talking about a year ago is virtually the same thing as the "Shelter-in-Place Megatrend" many folks are talking about now. No matter what you call it, the societal migration from face time to screen time is not simply a fad or a generational quirk. It is a fundamental societal change.Based on anecdotal evidence, the ranks of gamers worldwide has swelled significantly during the COVID-19 epidemic. Wall Street analysts agree. Morgan Stanley just reiterated its "outperform" rating on Activision Blizzard stock, noting that "[Video game] publishers continue to see increased player bases, engagement, and in-game monetization." Activision Blizzard Stock VerdictAfter the crisis passes, most of these new converts may reduce their gaming time. But they won't eliminate it. Activision has created tons of loyal new gamers during this crisis, and helped move up mainstream gaming adoption by many years. That in turn will funnel way more money into eSports leagues, gaming blogs, fan communities, and the rest of the ecosystem around digital entertainment.In other words, what Wall Street analysts call the "addressable market" of video gamers has probably increased by tens of millions of dollars during the last few months. And the amount of money to be made goes up sharply as well. We're not just talking about selling people a $49 disc once a year anymore. As gaming becomes a central passion for many people, they'll be willing to spend far more on the product. Activision, as an owner of much of the best intellectual property in the space, will be a big winner.And with its cash-rich balance sheet, Activision is ideally positioned to ride out this downturn and take advantage of opportunities both during the quarantine and once the economy starts to open back up again.Eric Fry is an award-winning stock picker with numerous "10-bagger" calls -- in good markets AND bad. How? By finding potent global megatrends … before they take off. And when it comes to bear markets, you'll want to have his "blueprint" in hand before stocks go south. Eric does not own the aforementioned securities. More From InvestorPlace * America's 1 Stock Picker Reveals Next 1,000% Winner * 25 Stocks You Should Sell Immediately * 1 Under-the-Radar 5G Stock to Buy Now * The 1 Stock All Retirees Must Own The post Activision Will Ride the Shelter-in-Place Trade to New Highs appeared first on InvestorPlace.
British stocks nudged higher on Thursday, with data both from the U.K. and abroad showing the deterioration of the global economy due to the coronavirus shutdowns.
Moody's Investors Service, ("Moody's") today assigned a Baa1 rating to The Kroger Co.'s ("Kroger") new senior unsecured notes. Kroger's Baa1 senior unsecured rating is supported by its large scale, leading market position vis-à-vis other traditional food retailers and diversified store format.
Online e-commerce giant Amazon.com Inc is preparing to launch an ultra-fast grocery delivery service in the United Kingdom, trade magazine The Grocer reported on Friday, citing suppliers. The project could involve making Amazon Fresh, Amazon's grocery delivery service, a free benefit of Prime in the UK instead of the monthly add-on fee or per-order charge it currently charges, the weekly magazine reported. Amazon was not immediately available to comment.
Uber Eats said orders for grocery delivery on its platform jumped 59% across Europe in March compared with February as countries locked down to fight the coronavirus, helping offset some of the impact of shuttered restaurants on demand. Uber Eats, which competes with the likes of Deliveroo, Takeway.com and Just Eat in online meal delivery, already offered alcohol and selected products from convenience stores. European general manager Stephane Ficaja said Uber Eats' store sign-up rate had doubled in March as convenience outlets looked for new channels to serve customers advised to stay at home to slow the spread of the virus.
Investing can be hard but the potential fo an individual stock to pay off big time inspires us. But when you hold the...
By John Jannarone, IPO Edge Is it possible for grocers and markets to offer delivery at normal prices to consumers? Unfortunately, razor-thin gross margins along with high costs of additional labor and fleets make it extremely difficult to do so profitably. Even Amazon.com, Inc. appears to offer grocery deliveries at a loss - which is […]
(Bloomberg Opinion) -- As lockdowns shutter stores and keep consumers cooped up at home, there will be many losers from the outbreak of the Covid-19 virus. But there will also be a few winners.Casino Guichard Perrachon SA, the French supermarket operator that’s been a target for short-selling hedge funds, is emerging as a beneficiary, in line with other grocers seeing a frantic stockpiling of food on both sides of the Atlantic.While Casino’s complex financial structure has long been a source of consternation, there are some jewels in its highly leveraged crown. These are the Monoprix and Franprix chains, both of which have strongholds in Paris.Between its brands, Casino has more than 40% of the Paris market, compared with 11.5% nationally, according to Charles Allen, an analyst at Bloomberg Intelligence. Much of French capital is served by small supermarkets, such as Franprix, which average around 5,300 square feet. This format has been particularly strong over recent weeks, as Parisians, like city dwellers worldwide, don’t want to venture too far from their homes to stock up on groceries. And while Monoprix’s clothing range will be under pressure, demand for food has rocketed.Casino should be able to capitalize on a boom in home delivery too. The company sells through Amazon and it just began testing an online grocery service with Ocado Group Plc. Its online non-food business Cdiscount is also expanding its grocery offer, and may benefit from increased demand for all kinds of electronics as people are forced to work from home.But as ever with the company controlled by Jean-Charles Naouri, things aren’t straightforward. Despite the upswing, Casino on Thursday gave no guidance and suspended its three-year targets, saying the coronavirus pandemic makes predictions impossible. Although free cash flow before disposals improved, the company’s ability to deliver cash in France has been disappointing over the past couple of years. While frantic shoppers in today’s environment should give Casino a boost, its weak cash generation and high leverage shouldn’t be overlooked. Moves to sell and lease back stores over the past two years add rental payments to its financial obligations.Net debt in France fell from 2.7 billion euros to 2.3 billion euros in 2019, helped by the asset sales. But overall borrowings rose from 3.4 billion euros to 4.1 billion euros, after Casino used debt to finance the simplification of its structure in Latin America.What’s more, Casino has decided to hit pause on its disposal program as it grapples with “unprecedented demand,” both in its stores and online. Still on the list to be offloaded is the Geant hypermarket business.The company is in the midst of a 4.5 billion-euro divestment program, having struck 2.8 billion euros of deals so far. Of this, about 1 billion euros worth have been signed, but not yet completed. When these transactions cross the finish line, Casino should be able to repay bonds due in 2021 and 2022. Still, Casino must agree another 1.7 billion of disposals to reach its targets. It’s confident it will still achieve them in time and it’s done a good job so far, with a better-than-expected price just this month from selling its Leader Price chain to German discount rival Aldi for example. But conditions could be rockier from here given the economic fallout from the coronavirus.The disposal program is important for both Casino and its parent Rallye, Naouri’s investment group. The proceeds are key for Casino to be able to resume paying dividends, and Rallye, which owns 52% of Casino, is counting on them. The debt-laden Rallye agreed a restructuring plan with the French courts last month that gives it 10 years to pay back 2.9 billion euros.Although the shares initially fell as much as 7.75% on Thursday, they ended up 1.7%, cementing their outperformance over the past month. So investors seem convinced it will continue to benefit from the current crisis. But as long-time followers of Casino know, even when the chips are looking up, there are always more spins to come.(Corrects Thursday’s share price move in final paragraph.)This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
There is no shortage of food in Britain and nobody will starve during the coronavirus emergency, said the chairman of online supermarket Ocado who believes he himself has been infected. Britain's supermarket sector is dealing with unprecedented demand during the outbreak as consumers stock-up, fearing a prolonged period of isolation, while schools, pubs, cafes and restaurants have been forced to close. Rose, 71, who is also a former chairman and chief executive of clothing and food retailer Marks & Spencer, has been in self-isolation after suspecting he had contracted the virus.
Moody's Investors Service (Moody's) has today downgraded to B2 from Ba3 the long-term corporate family rating (CFR) and to B2-PD from Ba3-PD probability of default rating (PDR) of UK online grocery retailer and technology-driven software and robotics platform business Ocado Group plc (Ocado or the company). Concurrently the rating agency has upgraded to Ba2 from Ba3 the rating of Ocado's GBP225 million outstanding backed senior secured notes due 2024. The outlook has been revised to stable from rating under review and the rating action concludes the review process initiated by Moody's on 3 December 2019.
The following are the top stories on the business pages of British newspapers. - The European Central Bank has embarked on a 750 billion euros ($799.95 billion) bond-buying operation to support sovereign and corporate debt in the face of the coronavirus crisis. - Next Chief Executive Officer Simon Wolfson has said the retail industry is facing the toughest time since the oil crisis of 1973 but claimed the fashion chain could survive a 1 billion pound slump in sales.