Ocado swings to first half profit as sales grow by 15.6%
Online grocery retailer Ocado has swung into the black in the first half of its financial year following its tie-up with supermarket Morrisons.
In the 24 weeks to 18 May, the retailer made a profit before tax and exceptional items of £7.5 million compared to a loss of £1 million in the same period a year earlier.
Ocado, which has never made an annual profit since it was founded in 2000, said gross retail sales increased by 15.6% to £442.4 million. EBITDA was up 78.6% to £34.3 million.
Chief executive Tim Steiner said: “Although price competition increased, led by the traditional supermarket retailers, significant progress in operating efficiency and the development of our product offer meant that EBITDA was up almost 80% in the period. This was achieved despite increased investment in Ocado’s strategic opportunities for the UK and overseas.”
Never Miss a Retail Update!However, Steiner warned that the overall rate of growth of the grocery market was currently impacted by subdued and cautious consumer spending. The company revealed that its average basket declined from £114.90 to £114.43 although the number of active customers climbed to 396,000 from 360,000.
Ocado said it had secured a site for a new customer fulfilment centre with works due to commence in the second half of 2014 on a smaller modular design for Ocado’s sole use. In addition, it is also in the process of creating extra capacity at its Dordon customer fulfilment centre which is due for completion later this year.
The company revealed that its specialist online pet store Fetch is growing at a “significant” pace as are sales of its Ocado own-label range, which increased by over 50% in the period.
Ocado said the Morrisons online grocery service, which is powered by Ocado’s online technology platform, is progressing well.
Steiner added: “The successful launch of Morrisons.com was particularly encouraging and paves the way for future agreements to commercialise the value of our intellectual property. We continue to invest to take advantage of partnership opportunities in the future as the demand for online grocery shopping increases internationally. Our IT projects to improve the platform and increase fulfilment capability are progressing well and position us to benefit from these future opportunities.”
Looking ahead, Steiner said the company expected its retail business to continue growing broadly in line with, or slightly ahead of, the online grocery market.
