Online retailer Ocado delays float and goes for growth

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The Independent Online

The online supermarket group Ocado will look to match the 70 per cent sales growth it delivered in 2005 rather than risk the distraction of a stock market flotation, its founders said.

The company, which was set up six years ago this month by three ex-Goldman Sachs bankers, is mulling other options to raise cash to fund its further expansion into the £120bn grocery market after increasing sales last year to £153m.

In March, it will double the choice for its customers by adding 10,000 new lines, focusing on its best-selling fresh and chilled products. Jason Gissing, co-founder and finance director, said a flotation in 2006 was "unlikely" despite speculation that the internet retailer could attempt to come to the market this year.

It has already raised £250m since it was set up, expanding its shareholder base from the original trio to include John Lewis Partnership, which supplies Ocado's groceries via its Waitrose arm, the investment banks UBS and Goldman Sachs, Jorn Rausing, the TetraPak billionaire and Nick Roditi.

Tim Steiner, co-founder and chief executive, said: "We have been advised by a number of people we could float the business tomorrow if we wanted. It is our view and our shareholders' view that we would prefer to wait until the business is more mature."

Ocado's turnover, which was £89.6m in 2004 according to accounts filed at Companies House, soared by 70 per cent in the 12 months to end-November - an increase of around £63m. This was after growth of 100 per cent in 2004. The business, which is run from a Hatfield warehouse, has been operationally profitable since the second half of last year on a month-by-month basis. It is on track to move into annual profitability at the pre-tax level in 2007.

Mr Gissing said the group had an "amazing Christmas" and set new records with three consecutive days of £1m-plus sales, helping turnover to hit £5.2m in the four days up to Christmas. It has maintained the rate of growth into the new year while improving customer service. Last week just one item was substituted in every fifth customer's order, against an industry average of four items in every single order.

Rapid expansion into new areas of the country such as the north-west and the south coast has fuelled its growth and it now has depots in Manchester and Rugby. Mr Steiner said: "We don?t expect the pace of growth to slow."