(Sharecast News) - Shares in Ocado slumped on Thursday as an upbeat outlook on cash flow and narrower losses failed to reassure investors.


Pre-tax losses at the online grocer and warehouse technology company came in at £374.3m from £387m a year earlier. Group revenue rose to 14% to £3.2bn and Ocado pledged to be cash flow positive by fiscal 2026.

Retail sales rose 14% to £2.68bn and 18.1% at technology solutions to £496.5m. Shares in the company were down more than 17% in London.

However, the company, which designs customer fulfilment centres for other supermarkets, also said it would move into a "less intensive" research and development cycle "focused on targeted enhancements to our platform and expect to progressively reduce our level of technology investment".

Analysts express concerns about the lack of new orders for Ocado's robotic warehouses and a delay in two openings in the US to early next year.

AJ Bell investment director Russ Mould said: "Being a shareholder in Ocado must feel like being kept waiting on a grocery delivery indefinitely as the promised profit never materialises."

"For now, the company continues to chalk up material headline losses as it pledges to turn cash flow positive in the year to November 2026. The longer Ocado goes without generating cash, the more nervous investors are likely to get about the company's level of borrowings."

"The market reaction suggests patience with the business is running out nearly 15 years on from its IPO. The group's technology solutions division - intended to provide its technology and logistics expertise in online groceries to global supermarkets - has reasonably positive guidance but not enough to justify the excitement it once generated."

"Crucially, there are few new deals in the pipeline while some of its existing arrangements have been scaled back or suspended."

"Ocado is reaching the point where more radical action is required, whether that involves a new management team being given a shot or hiving off its retail venture with Marks & Spencer."

Richard Hunter, head of markets at Interactive Investor, said Ocado's "growth projections are certainly insufficient to quell the doubts which investors have long since harboured".

"The shares are finding few friends in opening trades, with sellers pushing against an open door and the decline adds to a fall prior to this update of 32% over the last year, as compared to an increase of 7.5% for the wider FTSE250. The three-year decline of 75% in the price seems to be increasingly irreversible, and the market consensus of a hold could yet be subject to further negative pressure."

Reporting by Frank Prenesti for Sharecast.com

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