Ocado: Shares slump as double-digit growth fails to offset losses
Tech and grocery platform Ocado has reported another year of losses despite a strong performance in its online delivery arm.
Its share price fell by more than 13 per cent in early trades.
Overall revenue rose by 14.1 per cent to reach £3.1bn in the year ended December 1.
Lucy Rumbold, equity research analyst at Quilter Cheviot, said the weak share price was due to “weak guidance for the 2025 run rate, implying another delay of two CFCs [customer fulfilment centre].”
“The primary driver of revenue growth has been the rollout of CFCs, with seven more in the pipeline set to go live over the next three years.
“However, no new contracts have been announced, which would be crucial for enhancing Ocado’s investment case,” Rumbold said.
Ocado reported a loss before tax of £374.5m, down from £393.3m in 2023.
The grocer said the loss was mainly driven by additional depreciation and amortisation, with: “The go-live of three sites within the previous 12 months, the annualisation of the three sites that went live during 2023 and technology projects going live in the last 12 months.”
The company said revenue growth was driven by a 12.5 per cent increase in orders on Ocado.com and a 12.1 per cent increase in active customers.
It expects to grow sales volumes “well ahead of the market”, with 10 per cent revenue growth this year.
“In 2024, we delivered a shift in the potential of robotics and automation to improve retail supply chains. Our latest technologies have begun to roll out at scale to Ocado’s global partners,” Tim Steiner, CEO of Ocado Group, said.
“Online continues to drive the greatest share of organic growth in the global grocery market… we have a strong prospect pipeline across grocery, non-grocery and logistics,” Steiner added.
Ocado’s share price has dropped nearly 90 per cent in the last four years, with analysts concerned that the grocer has been underperforming.
But Robinhood lead analyst Dan Lane said the headline picture has become “brighter”.
“The real focus [now] is how to ramp up selling its robot warehouses and getting the most out of the M&S deal,” he added.
In 2019, Ocado sold 50 per cent of the shares it held in Ocado Retail to M&S. It will remain the controlling shareholder under 2025, until it relinquishes rights to M&S.
“Ocado doesn’t have the grace afforded to a plucky tech newcomer anymore so it really is time to show its partners and the market just how mature its back-end platform is.
“Losing Morrisons makes the M&S partnership even more crucial both to revenues and to its image – new and potential partners will want to see sustained success with a leading name and, so far, that’s what Ocado is demonstrating in Ocado Retail,” Lane said.