Ocado earnings drop as technology investment ramps up

Ocado has reported widening losses in full-year earnings for 2018 as it invests in further partnership deals, while revenue rose 12.3 per cent to £1.6 billion.

The online supermarket and delivery business has seen its share price double in the past year after it signed four partnership deals with major overseas grocery brands.

Media reports last week suggested that Ocado has been in secret discussions with Marks & Spencer over a potential delivery and logistics deal for the retailer’s online food business. Neither company has commented on the reports.

In its full year earnings statement for 2018, Ocado group said earnings were down 21 per cent to £59.5 million, down from £75 million in 2016-2017.

The company, which has a stock market valuation of £6.9 billion, driven in part by the potential to sign partnership deals for elements of its online retail infrastructure ‘smart platform’, robotic warehouse technology and delivery logistics business.

Last year Ocado signed a major partnership deal with US supermarket chain Kroger for its online delivery business.

The losses were driven in part by investment in the Group’s logistics and distribution network, including a fourth Customer Fulfilment Centre (CFC) in Erith, with a capacity of £1.2bn, making it the largest automated fulfilment centre in the world.

Active customer numbers were up 11.8 per cent to 721,000, up from 645,000 in 2017, while total order volumes grew 12.1 per cent to an average of 296,000 orders per week, up from 264,000 in 2017.

Tim Steiner, Chief Executive Officer of Ocado, said:“ 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.

He added:“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.”

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