Ocado slips into the red in the first half as it posts £3.8m loss

Adjusted loss before tax was £1m, compared with an adjusted pre-tax proft of £500,000 last year, “reflecting the stepped change in the depreciation charge associated with the opening of the new distribution centres”.

Ocado also made an operating loss of £1.1m, against a profit of £1.7m last year.

However, revenue jumped 15.6% to £355.9m in the 24 weeks ended May 19 “as a result of the focus on recruiting new customers and increasing the shopping frequency of regular customers”, Ocado said.

The online grocer signed a 25-year deal to partner with Morrisons in the period. Under the terms of the agreement, Morrisons will pay Ocado to use its technology and fulfilment centre as the Bradford-based grocer begins to sell food online.

Ocado chief executive Tim Steiner said: “The first half of 2013 has been an extremely busy period for us as we continued to grow both our customer numbers and average basket. We continued to improve our proposition, making it easier for customers to shop with us and giving them access to a wider range of products at competitive prices. 

“At the same time we have continued to drive the efficiency and capacity in our business, including the opening of our new Customer Fulfilment Centre, which is operating as planned, and which provides us with the capacity to grow further in the future. We remain well placed to take advantage of the accelerating structural changes in the industry as more customers choose online delivery for their grocery shopping.

 “We were delighted to announce a long-term agreement with our first strategic customer, Morrisons, to provide them with IP and operating services to help launch and operate their online grocery business. This development reflects the growing shift we are seeing in favour of online grocery shopping in the UK and internationally, and a validation of the unique technology, IP and operating model pioneered by Ocado to exploit this growing channel. 

“The positive financial impact of this agreement and the endorsement of our business model, positions us well for future strategic developments.

“While we believe that the economic and consumer environment remains challenging, we continue to see that consumers are increasingly looking to shop online for groceries, evidenced by the online growth figures reported across the grocery industry. We expect to continue growing broadly in line with the market.

 “We believe we remain well positioned to benefit from this continuing growth in online demand with increased optionality and flexibility in how we drive growth and profitability in our business in the future.”

Active customers stood at 360,000, up from 337,000 last year, while the average baskets size was £114.90 compared with £113.10, “partly reflecting the increase in customers’ propensity to spend more with us as the range extends”, Ocado said.

Ocado extended its range in the period to more than 31,000 SKUs.

Orders delivered on time or early improved from 93.2% to 94.4% and order accuracy also improved, from 98.3% to 98.9%.

Ocado made a number of improvements to its customer offer, including shortening the registration process for first-time users and enabling customers to import their favourites from existing online shopping competitors. Ocado also introduced its Smart Pass membership scheme, which combines free delivery, everyday discounts on a range of brands, free samples, and priority Christmas delivery slots.