Ocado Shares Plunge Amid Succession Row and Profit Decline

Shares in Ocado Group, the British online grocer and technology company, plummeted by nearly 15% to their lowest level in over a decade. The decline followed CEO Tim Steiner's comments addressing an apparent boardroom dispute over his succession and a significant plunge in the company's first-half pre-tax profits. Steiner, the co-founder, stated he has "no intention of being a puppet master" and suggested any successor would be content to work with him.

The company reported a statutory pre-tax profit of £17 million for the six months ending May 31, 2026, a stark decrease from £607 million in the same period last year. While group revenue surged by 54% to over £1 billion, this figure was significantly boosted by one-off termination payments totaling £354 million from partners Kroger and Sobeys. Excluding these one-off payments, revenue grew by only 1% to £684 million. Adjusted EBITDA, excluding these impacts, fell to £81 million from £92 million. In contrast, Ocado Retail, a joint venture with Marks & Spencer, demonstrated strong performance, with its EBITDA more than doubling to £73 million and revenue increasing by 15%.

The market reacted sharply to the results and the ongoing leadership discussions, with Ocado's stock falling between 15% and 19% on the day, trading near its 52-week low at 146.20 pence. This significant drop suggests investors were not satisfied with the balance between improved retail profitability and the slower-than-expected conversion of new business opportunities. The stock has experienced a substantial decline of approximately 24% over the last year and has fallen by over 90% from its peak in September 2020.

Tim Steiner, who co-founded Ocado, is slated to step down as CEO by early 2028, transitioning into a "founder role" to provide strategic guidance through 2029. Reports indicate that the acceleration of this succession planning, spearheaded by Chairman Adam Warby, occurred without full consultation with Steiner, leading to an internal boardroom tussle. Several major shareholders reportedly intervened, expressing support for Steiner and cautioning against an abrupt departure that could destabilize the company during a critical period of turnaround. This ongoing debate highlights uncertainties surrounding the company's future leadership and strategic direction.

Ocado continues its transformation from an online grocer to a global grocery technology solutions provider. The company has faced headwinds, including setbacks with North American partners like Kroger and Sobeys, which scaled back their use of Ocado's Customer Fulfilment Centres (CFCs) due to weaker-than-anticipated demand. Furthermore, several planned CFC openings for 2026-2028 have been delayed by one to two years. Despite these challenges, Ocado announced a new partnership with Asda for online deliveries starting next year and aims to achieve £150 million in cost savings. The company reiterated its guidance to become cash flow positive in the second half of 2026 and for the full fiscal year 2027.

Analysts and market observers remain cautious, expressing concerns about Ocado's slow progress in securing new technology contracts and its path to sustainable profitability. The company's ability to demonstrate tangible and consistent progress beyond its long-term promises will be crucial. The market will closely monitor how Ocado navigates this leadership transition and effectively expands its advanced technology solutions to global retailers.