Ocado Retail saw its underlying profits skyrocket 266 per cent last year thanks to the “dramatic channel shift in grocery” during the pandemic.
Ocado’s joint venture with Marks & Spencer, now its sole direct-to-consumer retail operation, enjoyed staggering growth during the year to November 29, 2020.
Retail revenues jumped 35.3 per cent to £2.18 billion, driving EBITDA from just £40.6 million in 2019 to £148.5 million last year.
Despite this the wider Ocado Group, which includes both its logistics and solutions arms, still struggled to turn a profit for the full year posting an overall loss before tax of £44 million.
While its UK solutions and logistics arm saw a 13.8 per cent rise in revenues, EBITDA dropped nearly 40 per cent to £44.4 million due to “investment in more capacity and technology”.
This included the launch of numerous customer fulfilment centres (CFCs) across the UK including two in London and one in Bristol.
Its international solutions arm, which has rapidly become Ocado’s key focus for growth as it moves away from consumer-facing retail, saw losses increase over 50 per cent to £83.3 million.
This loss was due to major investments in international CFC’s for third party retailers including Sobeys, Kroger and Groupe Casino.
While group EBITDA rose nearly 70 per cent to £73.1 million, “other” significant expenses hammered margins during the year.
An ongoing legal dispute with AutoStore, which is suing Ocado for copyright infringement incurred significant legal costs which the company expects to rise significantly next year.
Major acquisitions of tech companies including Kindred Systems and Haddington Dynamics also impacted profitability, as did the addition of 500 colleagues.
This investment strategy is due to continue into next year, when Ocado says it plans to spend £700 million on new projects for its technology clients.