Ocado losses widen amid ongoing labour shortage
Online grocer Ocado has seen its losses widen to £176.9 million in the year to 28 November after it invested more in its solutions business.
However, group revenue climbed by 7.2% to £2.5 billion in the period as Ocado Retail, a joint venture with M&S, grew its sales by 4.6% to £2.3 billion. The company said growth in orders was constrained in the second half by an ongoing tight labour market and reduced capacity at its Erith customer fulfilment centre following a fire in July.
The group’s international solutions revenue was also up, increasing to £66.6 million from £16.6 million in the prior year.
Meanwhile, group EBITDA fell to £61 million from a previous £73.1 million following investments in technology and group support functions.
Tim Steiner, chief executive of Ocado Group, said: “The past year has further reinforced that demand for online grocery is here to stay. In the majority of mature markets, the fastest growing channel is online and to truly win here food retailers need to deliver the best offer with the best economics across all customer missions.
“The innovation that is powering the development of the unique and proprietary Ocado Smart Platform is focused on providing an unequalled customer experience through ground-breaking technology which leads to an unrivalled low cost operation.”
During the period, Ocado opened five customer fulfilment centres for its solutions partners. It said all of these sites were opened on time, despite global supply chain disruption. It also launched three new sites for Ocado Retail including a mini customer fulfilment centre in Bristol and two larger sites in Purfleet and Andover.
Further openings are planned for Bicester and Luton to help the retailer expand ultimate capacity potential to around 700,000 orders per week. In addition, Ocado has announced that it is open two further sites in the north west and south east of England, which are both set to be up and running in 2024.
Ocado is predicting that Ocado Retail will return to strong, mid-teens revenue growth in 2022.
Steiner added: “Over the last twenty years Ocado Group has been a pioneer in the development of online grocery retailing. With the innovations to the Ocado Smart Platform announced in January 2022, we have again re-set the bar, demonstrating decisively that an online grocery service powered by OSP is able to offer what the customer wants with the economics the retailer needs.”
