Ocado profits dented by spending on robot warehouses as M&S deal rumours persist

Online grocer is reported to be in talks with Marks & Spencer about a potential online shopping deal, which would bring longstanding partnership with Waitrose to an end

Ocado said investment in its robot warehouses and IT systems were to blame for a drop in earnings, and boss Tim Steiner said he would not confirm or deny rumours that the retailer is in secret deal talks with Marks & Spencer.

The online grocer reported a £44.4m loss for the year to 2 December, although sales rose 12 per cent over the same period, with revenue rising from £1.32bn to £1.48bn.

Mr Steiner said the company’s performance in 2018 was “the result of many years of focus, dedication and perseverance: what we have called our ‘18-year overnight success’”.

“Our growth story, however, is only just beginning. We now have in place a platform for significant and sustainable long-term value creation as the leading pure-play digital grocer in the UK, a world-leading provider of end-to-end ecommerce grocery solutions, and as an innovative and creative technology company applying our proprietary knowledge to a range of challenges,” the chief executive said.

“Our transformation journey is well under way with increased cash fees earned and greater investment as we execute on behalf of our partners.

“Creating future value now will involve us continuing to scale the business, enhancing our platform, enabling our UK retail business to take advantage of all its opportunities for growth, and innovating for the future.”

Meanwhile, Mr Steiner would not be drawn on the question of whether Ocado is in talks concerning a potential partnership with M&S.

Recent reports indicated that a deal between the two retailers would bring to an end Ocado’s longstanding partnership with Waitrose, which runs until 2020.

“We are in the business of talking to retailers, we’re constantly talking to retailers around the world. We are not going to deny or confirm,” Mr Steiner said.

“We have a good relationship with Waitrose and we enjoy selling their products to customers.”

Additional reporting by agencies