Ocado update disappoints markets

The price of shares in FTSE 100 food delivery outfit Ocado (LON:OCDO) dropped by 3.53% to 2,649p (as of 11:15 GMT) after the company posted a pre-tax loss of £44 million for the year ended 29th November. Retail revenues for the period were up by 35% driven by strong UK demand and management said that they were continuing to invest in order to accelerate growth.

CEO Tim Steiner commented: “As we reflect on 2020 I would first and foremost like to pay tribute to the remarkable work of our colleagues in exceptionally challenging circumstances. The Group’s performance over the course of the year is testament to their dedication and I am confident that their adaptability and resilience will enable us to take full advantage of the opportunities ahead.

“The rapid acceleration of many pre-existing trends in business and society has been a feature of the Covid-19 crisis and the dramatic channel shift in grocery is a clear example of this. The landscape for food retailing is changing, for good. As we look ahead to a post-vaccine world and a return to a new normality, Ocado Group is very well placed to enable our grocery partners worldwide to bring the best customer experience to market, responsibly, with high levels of hygiene and superior, sustainable, and proven economics.

“Going forward, customers who have experienced the benefits of online grocery shopping are likely to become ever more discerning. Winners in the online channel will need to offer the very highest standards of customer service and the ability to serve a full range of customer missions. These include the full family basket as well as the convenience shop, the option of direct to home or pick up at the store, the same day or next day. With the standard-sized CFC as an anchor, we can enable our partners to offer customers a best-in-class immediacy service alongside the geographic flexibility of mini-CFCs together with the additional, tactical advantages of In-Store Fulfilment roll out. The uniquely flexible Ocado Smart Platform allows our partners to offer all this, supported by proprietary technology which is constantly evolving thanks to our growing capacity to innovate. We believe strongly that our platform will help our partners deliver a market-leading service to their customers, as the very promising initial results from our partners Groupe Casino and Sobeys have shown.

“We also look forward to welcoming shortly both a new Chairman and CFO and the fresh perspectives they will bring on our growth opportunities. With Kroger’s first CFC set to go-live in H1, and seven of our nine partners likely to be on the OSP by the end of the year, we are very excited to be ever closer to our ambition of changing the way the world shops“.