Ocado losses widen to £12.5m on expansion costs
Sales were up 17.2% to £843 million last year, but pre-tax losses increased from £600,000 to £12.5 million
Tuesday 04 February 2014
Chief executive Tim Steiner predicted a profit for this year as he revealed co-founder Jason Gissing would be leaving, making Steiner the only founding member running the business.
He added that the frosty relationship with Waitrose has thawed after the supermarket threatened legal action against Ocado over the Morrisons tie-up.
It has been one of the busiest years for Ocado, as the share price has soared 400 per cent in a year, although it was down 5 per cent today at 501p. However, the balance sheet remains stubbornly in the red.
Sales were up 17.2 per cent to £843 million last year, but pre-tax losses increased from £600,000 to £12.5 million. The loss was put down mainly to distribution costs rising 16.7 per cent and administrative costs up 42 per cent.
However, Steiner played down the lack of a profit and said next year would prove profitable.
He said: “If we wanted to turn a profit instantly, we could change our focus and do that but we are investing in growth.
Shareholders are asking us to invest for the opportunity to be part of a global shift of scale far beyond the size of Ocado. Analysts are predicting a profit in 2014 and, while it’s not for me to speculate, they haven’t been wrong in the past.”
The new distribution centre in Dordon, West Midlands, opened successfully last month and started dispatching Morrisons orders. Between 60,000 and 70,000 orders a week leave the site, and it is expected to hit 180,000 by the end of the year. Steiner said he expects to unveil plans for a new site this year.
The Morrisons deal caused tensions between Steiner and Waitrose managing director Mark Price, with the two no longer talking to each other.
Price said lawyers had been hired to look into any possible breach of contract with Ocado, which has a deal with Waitrose to deliver the supermarket’s groceries until at least 2018.
Steiner said: “Me and Mark are friends again. The relationship with Waitrose is very good at the moment. Everything is back on an even keel. I think it was a storm in a teacup but once we showed them what we were doing with Morrisons, they were happy.”
Ocado increased active customers by 30,000 to 385,000, with 40% of them new shoppers. Around one in three orders are on a tablet or smartphone.
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