Ocado sees full year losses widen

Online grocer Ocado has seen full-year losses widen after it was knocked by investment costs and hit by an accounting change.

Tuesday, 5th February 2019, 8:26 am
Updated Thursday, 7th February 2019, 5:34 pm
Ocado has provided a trading update for the City. Photo: Jonathan Brady/PA Wire

The group reported a pre-tax loss of £44.4 million in the year to December 2, which compares to £8.3 million the previous year.

Sales rose 12.3% to £1.59 billion. Earnings fell 20.7% to £59.5 million as it counted the cost of developing its new warehouses and IT systems.

Active customer numbers grew 11.8% in the year to 721,000 and total order volumes increased 12.1% to an average of 296,000 orders per week.

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However, average basket values were slightly lower at £106.85 versus £107.28, driven by an increase in prices.

Chief executive Tim Steiner said: “We now have in place a platform for significant and sustainable long-term value creation as the leading pure-play digital grocer in the UK, a world-leading provider of end-to-end ecommerce grocery solutions, and as an innovative and creative technology company applying our proprietary knowledge to a range of challenges.

“Our transformation journey is well under way with increased cash fees earned and greater investment as we execute on behalf of our partners.”

Looking ahead, Ocado said it is confident in achieving revenue growth in retail of between 10% and 15% this year

However, the grocer expects a decline in earnings as costs linked to its customer fulfilment centres continue to rise.

Total capital expenditure for the group is expected to be £350 million.

The results come as Ocado is mooted to be in talks with Marks & Spencer to sign a food delivery deal.

Ocado currently has a tie-up with Waitrose, but it has been suggested that M&S would step into the breach when the existing contract ends next year.

If the deal goes ahead, it will be the latest in a long line of tie-ups the firm has announced.

Ocado has forged partnerships with US retailer Kroger, Swedish supermarket group ICA, France’s Groupe Casino and in Canada with Sobeys.

Retailers are keen to use its cutting-edge technology, which includes robots in warehouses.