Ocado Group Plc · LSE:OCDO
Ocado — Investor Day (October 2011)
33 slides from Ocado's investor day presentation, Oct 20, 2011
Slide 1: Investor and Analyst Workshop
Ocado Group plc Investor and Analyst Workshop 20th October 2011 www.ocadogroup.com www.ocado.com
Slide 2: Forward-Looking Statements Disclaimer
Forward-Looking Statements Disclaimer This presentation contains oral and written statements that are or may be “forward-looking statements” with respect to certain of Ocado’s plans and its current goals and expectations relating to its future financial condition, performance and results. These forw
Slide 3: IGD's latest research predicts online grocery will double by 2016
IGD’s latest research predicts online grocery will double by 2016 UK Online Grocery Sales (2010-16F), £bn1 A growth market 9.3 8.4 7.5 • Estimates of longer term online penetration vary; with up to c.40% predicted 6.5 5.6 • IGD notes rapid move from PC to mobile shopping, with quality of mobile apps
Slide 4: CFC capital project summary
CFC 1 capital project summary On-going projects – CFC1 Overview Productivity Capacity Go Live Ambient • Automated store of 40k ambient Live, in ramp-up mini-load totes Conveyor • c5km of additional conveyor for 100% of conveyor extension load balancing, buffer and flow installed, ~70% in live
Slide 5: Automatic Storage and Retrieval System
Automatic Storage and Retrieval System • Ambient mini-load crane, capable of holding up to 40,000 totes in random access storage • The equivalent of 3,500 pallets of grocery storage • Allows whole pallets of goods to be directly decanted to storage totes • Improves the productivity of the inbound op
Slide 6: Order Storage Retrieval 2
Order Storage Retrieval 2 • Picking machine capable of storing over 40,000 tote locations • Up to 20,000 skus of range growth, when combined with ASRS • Adds up to 25,000 orders per week of pick capacity • Significant enhancements in design over OSR 1 • Supports pick speeds of up to 750 units per ho
Slide 7: Flow Rate Control Software
Flow Rate Control Software Natural flow Max desired throughput Av. throughput Description Pick Output • Intelligent control software to flatten peaks and troughs of tote throughput Time • By reducing peaks, higher overall throughput can be obtained With FRC • Reduces potential for congestion and Max
Slide 8: CFC 2 continues on time and on budget
CFC 2 continues on time and on budget CFC2 Overview • Land purchased in March 2011 • Groundworks and external building work complete • Mezzanine currently being installed • MHE will be installed on-site from the autumn • System testing from mid-2012 • Go-live planned for Q1 2013 • ~£105m capital spe
Slide 9: The online opportunity – driven by the improving online proposition
The online opportunity – driven by the improving online proposition Late Total UK Grocery Market Online Drivers Increasing adoption over time Adopter Profile • Range • Price • Freshness • Ease of use • Availability • Reliability Early % of shoppers for whom online shopping is more appropriate • Time
Slide 10: Ocado is expanding own brand range
Ocado is expanding own brand range Ocado Own Brand – New Label Design • Offering customers greater choice and a wider range of price points • Own brand products will fill gaps in the Waitrose range • Quality and price will be equivalent to Sainsbury ‘s & Tesco standard own brand ranges • Currently 3
Slide 11: Supply partnership with Carrefour
Supply partnership with Carrefour • Another step in Ocado’s strategy to offer the broadest and most diverse grocery range to all our customers around the UK • Ocado agreed with Carrefour to trial the ‘Reflets de France’ range (over 300 SKUs) • An authentic and historic French range. Complementary to
Slide 12: Ocado 'Shop in Shop' has delivered strong sales uplift for Daylesford
Ocado ‘Shop in Shop’ has delivered strong sales uplift for Daylesford Daylesford Farmshop • ‘Shop in shop’ technology developed for Ocado’s website • Allows suppliers to showcase their products, and provide supplier specific branding, marketing and information • Maintains access to the Ocado shoppin
Slide 13: Developing a comprehensive Non-Food offer
Developing a comprehensive Non-Food offer Non-food development • Ocado has a customer base of 300k active customers and a world-class last mile solution • Online general merchandise retailers are reliant on third party delivery with low success rates at meeting the customer on the first attempt • We
Slide 14: A destination site for select categories
A destination site for select categories Non-Food Website • Ranges in which we have depth will be highlighted as separate ‘stores’ on the Ocado website • All products available in a single unified Ocado basket • Store differentiation allows for wider, higher end range than suppliers would permit to
Slide 15: Non-Food will be fulfilled from a separate warehouse
Non-Food will be fulfilled from a separate warehouse Non-Food Warehouse • Grocery logistics is about cost domination • In Non-Food, with extensive range, higher average item prices and lower item collation, a different warehouse solution is required • Lower capital expenditure than grocery picking •
Slide 16: Ocado Saving Pass – at least 10% off over 500 leading branded lines
Ocado Saving Pass – at least 10% off over 500 leading branded lines Ocado Saving Pass • In return for a small annual fee, Ocado Saving Pass will be offered discounts of at least 10% off a range of over 500 leading branded goods • Ocado Saving Pass for all 500 products costs £8.99 per year www.ocadog
Slide 17: Customers have option of total saving pass or just specific saving groups
Customers have option of total saving pass or just specific saving groups Ocado Saving Pass groups • £8.99 total saving pass gives customers savings to all discounts in saving groups • Customers have option of purchasing saving pass for specific saving groups (costing between £1.99 and £5.99 per yea
Slide 18: Ocado loyalty scheme to be trialled
Ocado loyalty scheme to be trialled Loyalty Scheme • Loyalty scheme to be trialled on 10% of customers • Trial customers will no longer receive vouchers – Cost of loyalty scheme equivalent vouchers but expected to encourage more loyalty • Customers earn 1 loyalty point for every £2 spent with Ocado
Slide 19: More than 17% of Ocado checkouts are done through mobile
More than 17% of Ocado checkouts are done through mobile Checkouts on Mobile Devices by Month, % Checkouts 20% 15% % Checkouts 10% 5% • Ocado mobile app launched 0% July 2009 Jan 10 Aug 10 Jan 11 Aug 111 1) Up to August 2011 www.ocadogroup.com 19
Slide 20: Updated mobile apps due for launch in the coming months
Updated mobile apps due for launch in the coming months Updated iPhone and iPad apps www.ocadogroup.com 20
Slide 21: Ocado's new Webshop reduces time to shop by 25%
Ocado’s new Webshop reduces time to shop by 25% Time for a customer to complete a shop, as % of time taken in June 2010 115% 110% 105% 100% 95% 90% 85% 80% 75% 70% Jun-10 Sep-10 Dec-10 Mar-11 Customers placing their 1st order All customers www.ocadogroup.com 21
Slide 22: Demonstrating increased consumer adoption
Demonstrating increased consumer adoption Active Customers1, k Shopping Frequency2, % Customers Shops 294 19% during 12 26% 28% 262 week period 18% 220 More than 18% 193 19% six Four to six 63% 56% 53% One to three FY08 FY09 FY10 Q3 11 FY08 FY09 FY10 1) A customer is classified as active if they hav
Slide 23: Ocado - developing the online grocery proposition
Ocado - developing the online grocery proposition Online Drivers • Targeting 40k SKUs end 2012 - including authentic international/ethnic Range • Adding an additional 40k lines of non-food over the next two years • Currently price match Tesco over 7,000 branded products Price • Ocado Saving Pass off
Slide 24: Q&A
Q&A www.ocadogroup.com 24
Slide 25: Appendix A – 2011 H1 Financial Results
Appendix A – 2011 H1 Financial Results www.ocadogroup.com 25
Slide 26: Sales
Sales Gross Sales, £m Net Revenue, £m 296.7 276.6 245.6 +21% 230.3 +20% 189.1 178.3 1H09 1H10 1H11 1H09 1H10 1H11 www.ocadogroup.com 26
Slide 27: Sales drivers
Sales drivers Average Orders Per Week, k Average Basket Size, £ 108.4 119.15 115.77 114.09 +23% 88.4 (1.5%) 66.1 -1.6% 1H09 1H10 1H11 1H09 1H10 1H11 www.ocadogroup.com 27
Slide 28: Gross profit
Gross profit Gross Profit1, £m Gross Margin2, % Other Income, £m 85.0 5.5 +20% 191% 28.8% 28.8% 28.6% 70.7 (0.1%) 54.6 1.9 0.7 1H09 1H10 1H11 1H09 1H10 1H11 1H09 1H10 1H11 1) Gross Profit is defined as Revenue less Cost of Sales. Please see Appendix for definition of key income and cost lines. 2) Gr
Slide 29: Operating costs
Operating costs Change in % 1H10 1H11 1H10 1H11 Growth Sales (£m) (£m) (% Sales) (% Sales) 1H10 – 1H11 Trunking & 27.9 31.6 13.5% 11.3% 10.7% (0.7%) delivery CFC 21.1 25.9 22.9% 8.6% 8.8% 0.2% Other operating 2.3 2.9 24.1% 0.9% 1.0% 0.0% costs Admin expenses 13.3 15.8 18.6% 5.4% 5.3% (0.1%) Deprecia
Slide 30: EBITDA
EBITDA EBITDA, £m EBITDA Margin (Gross Sales) EBITDA Margin (Net Sales) 14.3 5.2% +79% 4.8% +49% +48% 3.5% 3.3% 8.0 1.5% 1.6% 2.8 1H09 1H10 1H11 1H09 1H10 1H11 1H09 1H10 1H11 www.ocadogroup.com 30
Slide 31: Operating profit and Profit before tax
Operating profit and Profit before tax Operating profit, £m Profit before tax, £m 2.4 0.2 1H09 1H10 1H11 1H09 1H10 1H11 ( 2.7) ( 6.7) ( 7.4) ( 12.7) www.ocadogroup.com 31
Slide 32: Appendix B – 2011 Q3 Trading Update
Appendix B – 2011 Q3 Trading Update www.ocadogroup.com 32
Slide 33: Q3 Financial Highlights
Q3 Financial Highlights • Gross sales increased 19.5% to £ 444.6m for the 36 weeks to 7 August 2011 (2010: £ 372.2m) • Gross sales increased 16.9% to £147.9m for the 12 weeks to 7 August 2011 (2010: £126.5m) • Average orders per week for the 12 weeks to 7 August 2011: 110,945 (92,834 in equivalent p