Online grocer Ocado moved into profitability in the final quarter of its financial year to reduce it full-year losses, it was revealed this morning.
Earnings-before-tax (EBT) profit for Q4 reached £300,000 and adjusted earnings-before-interest-and-tax profit for the second half of the year totalled £900,000, the first profits for the retailer since its flotation in the summer.
In its full 52-week year to November 28th, gross sales grew by 29 per cent to £551.1 million meaning EBT loss adjusted to exclude initial price offering (IPO) costs of £3.5 million ended at £8.7 million.
Tim Steiner, CEO of Ocado, said: “This was a landmark year for Ocado with gross sales up 29 per cent for the year; we have delivered on the targets set out at the flotation.
“We have continued our focus on improving the customer offer, which has led to a record number of customers and sales with the achievement of profitability in the final quarter. Ocado’s growth continues to outpace the market.”
Net revenues for the full-year jumped by 63 per cent year-on-year to £515.7 million and operating losses fell by 63 per cent to £5.4 million, including the IPO costs.
Many had doubted the prospects of long-term profitability for the company, which leads to its initial share price being much lower than anticipated, and its management will hope that these results will silence some detractors.
Neil Saunders, Consulting Director of Verdict Research, commented that these figures may give a boost to Ocado’s share price but warned, much like the Chancellor last week, not to read too much into one quarter’s performance.
“There are a whole host of downside risks this year including a more frugal consumer trading away from some of the more expensive goods Ocado sells, Waitrose Deliver moving into Ocado’s core London market and the increased costs of delivery through higher oil and fuel prices,” Saunders added.
“While Ocado’s customer proposition is in excellent shape, the financials of the company are sensitive to all of these shifts which could provide disruptive to continued profit growth.”