Ocado’s hefty investment in new warehouses and IT systems after ramping up its expansion has stung the retailer’s half-year report, whereby it reported a £9 million loss.
The online grocer retailer’s loss in the six months to June 3 compare with pre-tax profit of £7.7 million a year earlier.
Underlying earnings also plunged 13.9 per cent year-on-year to £38.9 million for the retailer’s first half period.
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Meanwhile, retail revenue growth slowed to 11.7 per cent year-on-year, which Ocado blamed on the Beast from the East storms at the start of the year.
However, the company – which recently entered the FTSE 100 – said its first half had been a “transformational period” after sealing a string of international deals – most recent being US grocery giant Kroger in May.
Shares in Ocado have also skyrocketed by more than 260 per cent over the past year and this success means higher-than-expected bonus payouts for its top bosses, with around another £9 million penciled in for 2018.
Ocado said retail earnings would start to “improve significantly” over the remainder of its financial year as the benefits of the new warehouses start to bear fruit.
“This is a transformational period for Ocado,” chief executive Tim Steiner said.
“We have developed unique and proprietary technology to offer retailers an end-to-end operating solution for grocery retail that enables them to meet the changing needs of consumers.”
He added: “In order to fully capitalise on the opportunities ahead of us, we are working at pace, investing more and focusing sharply on execution to bring on new capacity in the UK and to achieve successful outcomes for our partners.”
The half-year results showed retail earnings remained largely flat, edging 0.7% higher to £45.5 million after investment in its new warehouse at Andover in Hampshire, with costs of a new site in Erith, south-east London, set to weigh on earnings in the second half.
Ocado said it still planned to spend another £4 million on its technology division and the Ocado Smart Platform.
The company had already cautioned in February that investment would hit earnings this year, with spending set to surge to £210 million.
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