May 2, 2018

Opening Quote: StanChart ‘good enough’, Ocado goes one better

When a bank launches a new global branding campaign with the tagline 'Good enough will never change the world' - having spent 18 months and consulted 85,000 staff in the process - its results need to be better than just good enough. On a statutory basis, StanChart reported a profit of $1.19bn in the three month period, a 20 per cent increase on the same time a year ago but slightly below consensus forecasts of $1.21bn. Still, it represented a continuation of gradually better performance. Today, chief executive Bill Winters said performance - if not quite like that of Usain Bolt coming into the home straight of the 200 metres - was improving fast enough to "Take us above an 8 per cent return on equity in the medium term". They raised their target share price for Ocado from 570p to 610p, arguing that "The circa-10 per cent price cut on popular products announced by Sainsbury's post [deal] completion will further intensify competition and increase the lossmaking potential of [other] online offerings further, pushing the new top three to focus on securing their traditional offline models. Ocado should take advantage of this distraction." That is despite the fact that Asda pension scheme members will be better off because they are supported by the whole of the Walmart group, and Sainsbury's pension scheme members will be better off because they are supported by a bigger company with more property assets.

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