Ocado Targets Profitability in 2026 After Investor Frustration

Ocado has announced its goal to achieve profitability by the next financial year, starting in December 2025, following a robust first half of the year. This statement comes as investors express growing frustration after years of the company operating at a loss. The online supermarket, known for its joint venture with M&S and its innovative robotic warehouse technology, has not yet reached the expected cash flow positive status.

In its first-half update, Ocado reported a remarkable 76.5 percent increase in underlying earnings for the six months ending June 1, 2025. The majority of this growth stemmed from its technology division, which saw adjusted EBITDA rise to £91.8 million, up from £52 million in the same period the previous year. Overall revenue increased by 13.2 percent to £674 million.

Investor Sentiment and Market Performance

Despite the positive earnings report, Ocado’s shares have lost approximately 90 percent of their value over the past five years. The company’s retail operations, while growing quickly, still represent a small fraction of the overall market. Investors have been banking on the success of Ocado’s technology, which has bolstered its market value, but the retail segment’s slow progress has dampened enthusiasm.

Following the earnings announcement, Ocado’s stock surged nearly 11 percent to 261.4 pence, though it remains down 26.4 percent over the last year. Analysts note that the company’s largest US partner, Kroger, has been cautious with its rollout of automated warehouses, while its Canadian partner, Sobeys, has paused plans for a fourth warehouse.

Mark Crouch, a market analyst for eToro, remarked that investor patience is wearing thin. He stated, “Ocado continues to test the limits of investor patience. Once viewed as a pioneer in grocery logistics, the company’s downward spiral has become a case study in hype over substance.” Crouch commented that while management’s goal of achieving cash flow positivity by next year is encouraging, it follows several years of unmet expectations.

Future Prospects and Operational Changes

Ocado’s Chief Executive Officer, Tim Steiner, emphasized the company’s commitment to cash flow positive operations in the upcoming financial year. He noted that the Technology Solutions division has more than doubled its EBITDA, and that liquidity remains strong, exceeding £1 billion.

“Our focus remains on turning cash flow positive during FY26, supported by continued growth with our partners and cost discipline across the business,” Steiner stated. Although the full-year guidance has not changed, the company faces mounting scrutiny regarding its ability to convert its advanced technology into sustainable financial performance.

The tie-up with M&S continues to provide stability, but analysts question whether Ocado’s primary business model can sustain profitable growth in the long term. Investors are now left to consider whether the company can effectively leverage its technological advancements to yield consistent financial results.

As Ocado aims to navigate these challenges, its future performance will be closely monitored by investors and analysts alike, who remain cautiously optimistic about the company’s potential turnaround.