Revenue soars at Ocado during lockdown
Retail sales for the first half of 2020 for online grocer Ocado jumped 27 per cent to £1bn, as Brits did their supermarket shopping from home.
The group reported a loss before tax of £40.6m in the six months to the end of May, citing an increase in investment to handle increased demand as a result of the coronavirus pandemic.
This was down from a loss of £147.4m in the same period last year, though that included £99m in exceptional costs after a major fire broke out at its warehouse in Andover.
Ocado’s share price fell more than 2.6 per cent as trading began in London.
Its fee intake from overseas companies which use Ocado’s technology rose 58 per cent £73.7m, as it opened its first partner robotic distribution warehouses in Paris and Toronto.
Following the raise of £1bn through an equity and bond issue last month, Ocado said it had £2.3bn in cash on its balance sheet.
As a result it is seeking new sites in London for its Ocado Zoom centres, after the successful launch of its first location in west London which met its capacity target a year ahead of schedule.
“As a result of Covid-19 we have seen years of growth in the online grocery market condensed into a matter of months; and we won’t be going back,” said Ocado chief executive Tim Steiner.
“We are confident that accelerated growth in the online channel will continue, leading to a permanent redrawing of the landscape of the grocery industry worldwide.”
Thanks to becoming a 50:50 joint venture with Marks & Spencer (M&S) last year, Ocado said it is now the fastest growing grocer in the UK.
Industry data shows online penetration of the British grocery market has almost doubled in recent months to 13 per cent from seven per cent before the pandemic.
Globally, online grocery shopping usage is currently low, with significant scope for expansion.
Its share price has risen 60 per cent in the past year, driving its market value above £15bn — while the combined value of rivals Sainsbury’s, Morrisons and M&S sits around £11bn.
“Ocado is planning on capital expenditure of roughly £600m this year, so it is clearly optimistic about its prospects,” said CMC Markets analyst David Madden.
“The lofty valuation of Ocado has prompted a few raised eyebrows, so the company has high expectations to live up to.”