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Sales rise at Ocado, but losses widen

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Ocado today reported growing losses despite a 15.6% boost to sales.

The company said in its half-year results statement that revenue grew to £355.9m in the first half of its financial year, 15.6% ahead of the same time last year. But pre-tax losses grew to £3.8m in the 24 weeks to May 19, from a profit of £0.2m last time.

The company said it continued to progress towards growing capacity and sales while also targeting “long-term profitability” by developing its customer proposition, building its customer base, optimising operations and building capacity.

“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,” said Ocado chief executive Tim Steiner. “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 CFC, 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.”

The company also focused on its recent 25-year deal to supply the logistics for Morrisons’ forthcoming online food service. Steiner said Morrisons was its “first strategic customer,” and that the deal paved the way for “future strategic developments”. The partnership, he said, “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.”

Ocado said its on-time or early orders improved to 94.4% during the half-year while order accuracy rose to 98.9% during the period. Most orders were made by holders of its Smart Pass membership scheme, which combines free delivery, discounts and free samples with priority booking of Christmas slots.

Average basket values rose slightly to £114.90, from £113.10 at the same time last year, and active customer numbers rose to 360,000 from 337,000 last time.

The company said that more than 30% of its checkouts now took place via its mobile apps, while checkout through the mobile website also continued to grow strongly. Its product range widened to more than 31,000 products during the period.

“We know that speed, ease of use and convenience are very important to both our existing and potential new customers,” said Steiner in his review of the business. “We continued to improve each of these elements, and during the period we introduced a number of initiatives to enhance our customers’ experience and ease of shopping.”

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