“Online grocery is here to stay” claims Ocado boss, despite 12% drop in annual earnings

Ocado chief executive Tim Steiner has claimed that “online grocery is here to stay” as the tech platform and online grocer reports a 12% drop in full-year earnings (to 28 November 2021).

Sales remained strong, rising by 7.2% to £2.5bn across the group, with sales for the retail division (now a 50:50 joint venture with Marks & Spencer) jumping by 4.6% to £2.3bn, tracking ahead by 41.5% on a two-year basis.

However, losses of £176.9m (a 124% increase on 2021) meant that Ocado posted a group EBITDA of £61m, a significant drop on the £73.1m recorded the previous year.

The losses reflect an “increased investment” in Ocado’s technology and solutions business; in particular the “increasing roll out of Ocado Smart Platform (OSP)”.

Last month, Ocado announced what it described as a “game-changing” suite of new technology, Ocado Re:Imagined. It has also said it expects the retail division to “return to strong, mid-teens revenue growth in 2022” when shopping conditions return to normal as consumers regain confidence.

Read more: Ocado reveals “game-changing” new tech

Notwithstanding the short-term challenges, Ocado – which currently accounts for 12% of the total grocery market share in the UK – expects strong demand for online grocery in the UK to continue. It also expects the fee revenue from its OSP business to more than double over the coming year.

Following the success of Zoom in Acton, West London, Ocado Retail  also expects to open a second Zoom site in Canning Town, London in the second quarter of 2022. Three further sites, one in London and two in other UK cities, will open over the next 18 months.

“The past year has further reinforced that demand for online grocery is here to stay,” said Ocado chief executive Tim Steiner.

“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.

Steiner went on to explain that the innovation powering the development of the OSP focuses on providing an “unequalled customer experience” via ground-breaking technology, ultimately leading to a low-cost operation.

“The new generation of Ocado technology, which we have called Ocado Re:Imagined, represents a transformational leap forward allowing our partners to comprehensively out-compete peers online,” he continued.

“Over the last 20 years, Ocado Group has been a pioneer in the development of online grocery retailing. With the innovations to the OSP announced in January, we have again reset 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.”

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