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Ocado EBITDA up as pre-tax losses fall


Online grocer Ocado has seen EBITDA rise 23.9 per cent to £34.5 million in its full year, financial results released today reveal.

In the 53 weeks ended December 2nd 2012, the grocer reduced its loss before tax to £0.6 million, a 75 per cent decrease on the same period a year earlier.

Revenue rose 11 per cent to £664 million, thanks in part to an extension of Ocado’s product range over the period, which saw the retailer increase its offering by 40 per cent, while its own-label range saw sales jump 70 per cent year-on-year.

Since floating on the stock market in July 2010 at 180p per share, Ocado is yet to prove profitable though last month, retail stalwart Sir Stuart Rose was announced as incoming Chairman of the company with a view to aiding in its turnaround strategy.

Announcing the appointment last month, Ocado CEO Tim Steiner welcomed Rose’s extensive experience and noted that he will be “joining Ocado as we enter a hugely exciting period, with a near doubling of our capacity.”

In its trading statement, Ocado noted that it continues to make progress with its second fulfilment centre in Warwickshire and the site is set to be ready to take customer orders from the end of this month, following the opening of its non-food distribution centre in Welwyn Garden City last week.

Such attention to honing the efficiency of its delivery process has aided such progress, explained Matt Piner, Research Director at Conlumino, though he added: “In an intensely competitive sector, Ocado’s weak profitability remains a concern.

“There are some impressive stats in this update. Improvements in capacity have helped boost the accuracy and timing of orders, which should help improve customer loyalty in the competitive sector, leaving Ocado better placed to tap into a trend of the proportion of food spending online being set to double from 5 per cent to 10 per cent over the next five years.

“It is facing some pretty hefty rivals in its core market and, in a ‘multichannel’ world, Ocado’s lack of stores could end up being the decisive disadvantage.

In contrast the likes of Tesco, Asda and Sainsbury can be adaptable in meeting in consumer demands, with an example being Tesco fulfilling 5% of orders through its click and collect ‘drive-through’ service over Christmas.

“At present, this flexibility remains out of Ocado’s reach.”

However, Ocado continues to focus on the growing trend of mobile shopping , updating its range of mobile apps over the year.

Mobile checkouts are “continuing to grow strongly” the grocer said, with 28 per cent of checkouts now across apps.

Ocado said in a statement that online shopping is of increasing importance to customers despite the tough economic climate and that it is well-placed to grow further thanks to a “market-leading offer.“

Steiner concluded: “Shopping online for groceries is clearly of increasing importance to consumers.

“In 2013, we will continue to improve the attractiveness of Ocado to customers and we shall substantially increase our capacity with the opening of our second fulfilment centre, creating over 1,000 jobs in the Midlands.”

Published on Thursday 07 February by Editorial Assistant

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