Ocado profits fall after investment in distribution centre

Pre-tax profits fell by £1.7m to £7.7m but EBITDA advanced 2.7% to £45.2m as the etailer reduced promotions and improved efficiencies.

Ocado’s retail revenues advanced 12.5% to £659.6m in the period to May 28, when order volumes rose 15.6% to reach an average of 260,000 per week.

The number of active customers climbed 12.7% to approximately 600,000.

Ocado’s average basket value was down 1.4% to £108.45 as multi-buy promotions were reduced and shoppers took advantage of the Smart Pass scheme.

The retailer reported that its Andover fulfilment centre, where higher depreciation affected pre-tax profits, was “scaling in line with expectations”.

Technological leaders

Ocado chief executive Tim Steiner said he was pleased with performance, and with a long-awaited deal for an unnamed European retailer to use the etailer’s Smart Platform technology.

Steiner said: “I am pleased to announce another period of consistent customer, revenue and order growth, as well as improved operating efficiencies within our UK retail business.

“As the channel shift to online advances we continue to gain share in a competitive UK market”

Tim Steiner, Ocado

“After several years of price deflation in the UK, we have seen this begin to ease in the period and, when combined with our increasing scale and operational efficiencies, this trend will support the continued profitable growth of our retail business.

“As the channel shift to online advances we continue to gain share in a competitive UK market.

“We expect the trend for grocery shopping online to continue as consumers become more tech-savvy and gain confidence in the online services available.

“Ocado will be a natural beneficiary of that trend thanks to its industry-leading customer offer. We continue to build new facilities in the UK in order to meet the increasing demand we see.

“Meanwhile, we have invested further in our platform and innovation to advance our technological leadership, as we continue to grow our technology and engineering teams.

“With the scaling of our Andover customer fulfilment centre and the store-pick capabilities we have developed for Morrisons, we are able to better demonstrate the quality of our platform to current and future international customers.”