Solid half year growth for Ocado

Ocado has posted its half year results for the 26 weeks ended 28 May 2017, showing further growth in customer numbers, orders and revenues.

Retail revenue increased 12.5% to £659.6m, gaining market share, due to strength of the offer to the customer.

EBITDA rose by 2.7%5 to £45.2m after gross margin increase, driven by a reduction in unfunded promotional activity, and improved operating efficiencies, offset by cost inflation, impact of Andover customer fulfilment centre (CFC) opening, and further investment in its platform.

Profit before tax of £7.7m decreased by £1.7m, resulting from higher depreciation from Andover CFC opening.

Order volumes grew by 15.6% to an average of 260,000 orders per week (1H 2016: 225,000), with the highest number of orders delivered in a week reaching 280,000. The average basket size value declined by 1.4% to £108.45 (1H2016:£109.94) impacted by the continued uptake of Ocado Smart Pass and reduced multi-buy promotions.

Active customers increased by 12.7%5 year-on-year to over 600,000. Maintained superior customer service levels with on time delivery stood at 95% (1H 2016: 94.9%) and order accuracy at 98.9% (1H 2016: 99.1%).

CEO Tim Steiner (pictured) said, “I am pleased to announce another period of consistent customer, revenue and order growth, as well as improved operating efficiencies within our UK retail business. In addition, I am delighted to have announced our first OSP agreement with a European retailer.

“After several yearsof price deflation in the U.K., we have seen thisbegin to ease in the period and, when combined with our increasing scale and operational efficiencies, thistrend will support the continued profitable growth of our retail business.

“ As the channel shift to online advances we continue to gain share in a competitive U.K. market. We expect the trend for grocery shopping online to continue as consumers become more tech savvy and gain confidence in the online services available. Ocado will be a natural beneficiary of that trend thanks to its industry-leading customer offer. We continue to build new facilities in the U.K. in order to meet the increasing demand we see.

“Meanwhile, we have invested further in our platform and innovation to advance our technological leadership, aswe continue to grow our technology and engineering teams. With the scaling of our Andover CFCand the store pick capabilities we have developed for Morrisons, we are able to better demonstrate the quality of our platform to current and future international customers.

“Grocery retailing is changing and we are ideally positioned to enable other retailers to achieve their online aspirations. We expect our recently announced international partnership to be the first of many and look forward to helping more retailers provide a high quality service to their customers in this rapidly evolving market.”