Ocado investments hit half-year profits as sales jump

No comments

Ocado’s half-year profits have declined, as chief executive Tim Steiner plans to invest more in innovation “taking advantage of a scale of opportunity that we have never seen before” in online grocery.

Ocado’s group EBITDA was down 36% to £19.8m in the 26 weeks to May 31, as the grocer increased investment in its international online solutions and technology innovation.

In the same period, sales jumped by 27% to £1.02bn, reflecting the unprecedented demand for online grocery amid the coronavirus pandemic.

UK online grocery penetration has doubled in the past few months, which Ocado says is evidence of a permanent shift in food shopping habits.

To respond to this change, Ocado has employed 300 more technology colleagues during the period and opened its first Ocado Zoom site in west London to facilitate faster services.

A second Zoom site is planned for north London and the retailer is looking at further sites for launch.

Ocado ramped up both its international and UK services to cater to this online shift, launching fulfilment centres for Groupe Casino in France and Sobeys in Canada ahead of schedule.

In the UK, Ocado partnered with Morrisons to bolster its delivery services.

Plans to switch Ocado’s stock from Waitrose to Marks & Spencer products, including 5,000 food lines and 1,600 clothing and home lines, are on track for September, but M&S chair Archie Norman recently warned that Ocado’s capacity limits may impact the partnership initially.

Ocado chief executive Tim Steiner said: “The world as we know it has changed. 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.

“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.”