Ocado: from “middle-class indulgence” to Amazon-slayer

“Vindication” at last for Tim Steiner, the former bond trader who quit Goldman Sachs with two colleagues in 2000 to start an online grocery business, said Jonathan Eley in the Financial Times. Shares in his baby, Ocado, rocketed by 44% last week after it sealed a “transformative” deal to sell its “smart” delivery platform to the US grocery chain Kroger, the world’s third largest retailer. Written off by many as “a middle-class indulgence”, Ocado has reinvented itself as an Amazon-slayer. Grocery chains taking defensive action in Canada, France and Sweden have already licensed its robotic nous. But securing a $122bn sales gorilla, with 8% of the US market, is judged to be a game changer.

“Rarely has one day’s trading produced such big winners and losers in a single British stock,” said Bloomberg. Having nearly doubled its value in a day, Ocado may now enter the FTSE 100 index valued at about £5.3bn – or £600m more than M&S – delivering a tidy £110m bonus for Steiner. Meanwhile, an army of hedge funds betting it would fail have been left “licking their wounds”.

The doubters might well ask “how the hell did that happen?”, said Alistair Osborne in The Times. “If only they’d listened to Steiner droning on” about how Ocado wasn’t just “a van outfit”, but actually “the owner of the wizziest food delivery tech around”, which it will now use to build 20 automated warehouses for Kroger. Since we don’t know the terms of the deals, this valuation “is taking an awful lot on trust”, said Nils Pratley in The Guardian. “Still, Ocado is plainly now a serious grown-up company.” And not just that, said Ben Marlow in The Sunday Telegraph. Forget the food. We may be looking at the UK’S next big “tech champion”.