Ocado losses widen as retail sales slide in ‘challenging’ market

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Ocado has suffered widening half-year losses as sales made through its retail business slipped in what it called a “challenging” UK market.

Tim Steiner, Ocado CEO

Tim Steiner said Ocado’s ‘new partner pipeline is as strong as ever’

The online grocer-cum-tech company booked a pre-tax loss of £211.3m in the 26 weeks to May 29, ballooning from £27.9m during the same period a year ago.

The group swung to a £13.6m EBITDA loss, having made a £61m profit on that basis the previous year.

Ocado said sales made through its retail joint venture with Marks & Spencer in the UK dropped 8.3% to £1.12bn during the six months, despite growing its customer base 12% to 867,000.

EBITDA from the Ocado Retail division plummeted 72.8% to £31.3m.

The group said those declines offset the “strong growth” in its Ocado Solutions business, which delivered a 10.7% uplift in UK sales to £395.6m and more than doubled international sales to £58.5m through partnerships with the likes of Kroger in the US and Sobeys in Canada.

Despite the widening losses, Ocado boss Tim Steiner hailed “significant progress” during the six-month period.

He said the group had “put all the building blocks in place to deliver profitable growth and strong cash flows”.

Steiner added: “Our international Solutions business has good momentum, with 16 CFCs [customer fulfilment centres] now open, of 58 committed so far. Each of these CFCs will generate dependable, recurring cash flows and attractive returns on capital.

“Eleven of the world’s leading grocers are looking to Ocado to provide the technology and solutions to power their online grocery activities and our new partner pipeline is as strong as ever.

“Following our recent successful financing, we now have a strong financial position and ample liquidity to fund the requirements of our existing and expected customer commitments into the mid-term. No additional group financing will be needed as the business becomes cash-flow positive.

“With these building blocks in place, notwithstanding the near-term challenges for the consumer in the UK, we look forward to the future with confidence.”