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Ocado raising £500mln from bond issue as sales soften

The 13 weeks to 1 December are expected to see retail revenue growth of between 10% and 11%, with Ocado Zoom likely to outperform retail revenue

Ocado Group PLC - Ocado displays £500mln bond issue, revenue update

Ocado Group PLC (LON:OCDO) dropped after announcing a £500mln convertible bond issue and fourth-period revenues not as ripe as investors were hoping.

To help pay for the roll-out of robot-operated warehouses for its overseas clients and for general corporate purposes, the online grocery group is issuing bonds due in 2025 with a coupon of between 0.75% to 1.25% and a conversion premium of 40% to 45%.

READ: Ocado ups investment after winning deal with Japan's largest retailer

The announcement comes days after the winning of a contract with Japan’s largest grocer, Aeon, to set up a new online delivery business.

The FTSE 100-listed company also added a lukewarm update on the final 13 weeks of its trading year, where revenue growth at its UK joint venture with Marks & Spencer Group PLC (LON:MKS) softened to between 10% and 11% from the 11.4% in the 13 weeks to 1 September.

Full-year guidance for revenue growth for the Ocado Retail JV was set at between 10% and 15%, while the group's new 60-minute delivery service, Ocado Zoom, was likely to outperform retail revenue.

According to retailing analyst Nick Bubb, Ocado “ought to be doing a bit better than that, given all the extra customer fulfilment centre capacity it has laid down”.

Shares fell 7% to 1,235p on Monday morning, aligning with the price at close on Thursday, before Ocado announced the new deal with Aeon.

Quick facts: Ocado Group PLC

Price: 1307.5 GBX

AIM:OCDO
Market: AIM
Market Cap: £9.29 billion
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