Ocado's (OCDO) share price gained 5 per cent to 101p following news that former Marks and Spencer chief executive Sir Stuart Rose is to become the online grocer's chairman in May.
But while news that the man who is widely seen as having helped M&S recover prompted some city analysts to reiterate their buy ratings on the company's shares, we still believe Ocado's business model is flawed. It is facing an uphill battle against Sainsbury's (SBRY) and Tesco's (TSCO) online businesses and things won't get any easier once Morrisons rolls out its internet shopping service. Ocado also has very tight margins. The last set of half-year results showed the company made a £181,000 pre-tax profit from revenues of £308m, while it has consistently reported hefty full-year pre-tax losses since 2007.
