Ocado sales growth slows but could make first end-of-year profit


Ocado has seen sales growth slow for the first half of the year as it continues to invest back into its business.

Sales rose 15.6 per cent to £442.4m for the 24 weeks ended 18 May 2014; a slow-down from Q4‘s figure of 18 per cent as its ‘Low Price Promise‘ dragged sales growth down.

But pre-tax profit rose to £7.5m for the first time as its £216m deal with Morrisons in January saw an EBITDA surge of 78.6 per cent to £34.3m.

The grocer, also known as an international supply chain and IT service provider, has continued to invest in IT and fulfilment solutions and has agreed to an expansion of its Dorking CFC.

Ocado also grew its own-label offer by 50 per cent following pressure from discounters.

Tim Steiner, CEO of Ocado, said: “The successful launch of Morrisons.com was particularly encouraging.”

But Stephen Springham, senior retail analyst at Planet Retail, said the tie-up with Morrisons provided “limited salvation.” He said: “It does not break the vicious circle that is Ocado‘s business model – the need to drive volume and maximise operational capacity, but then having to invest massively in developing new fulfilment centres and rolling out more spokes to the hubs.

“Having Morrisons subsidising some of this investment in infrastructure only sees the burden shared, rather than alleviated completely.”

Ocado shares fell 5 per cent this morning.


Please enter your comment!
Please enter your name here