Revenues at Ocado (OCDO.L) surged by 27% in the six months to May, as the online supermarket benefitted from a marked shift towards online shopping during the coronavirus pandemic.
The delivery juggernaut said that it was able to meet the “unprecedented, and sustained” demand for online food delivery during the lockdown, which it said had led to “a permanent redrawing of the landscape of the grocery industry worldwide.”
Despite the surge in sales, underlying profits fell by 36% to £19.8m ($24.8m), largely due to increased investment in its international business during the pandemic.
Ocado rolled out new robotic distribution warehouses in Paris and Toronto — and saw the fees charged to international grocers using its delivery technology climb by 58% to £73.7m.
Overall, the online supermarket made a before-tax loss of £40.6m in the six-month period.
Ocado said it now had £2.3bn in cash on its balance sheet after it raised £1bn by issuing a mixture of new shares and debt to give it the “financial flexibility” to expand during the crisis.
“The world as we know it has changed. As a result of COVID-19 we have seen years of growth in the online grocery market condensed into a matter of months, and we won't be going back,” said Tim Steiner, the chief executive of Ocado.
Shoppers across the world flocked to online food delivery platforms in droves in recent months as sweeping coronavirus lockdowns were implemented by authorities.
Ocado said on Tuesday that the online food delivery market had nearly doubled within a few months, while monthly online grocery sales in the US had reached a level six times what they were in August 2019.
The company also said that online grocery platforms in China had seen triple digit year-on-year sales growth during the pandemic.
“I have no doubt that we will rise to the challenge, taking advantage of a scale of opportunity that we have never seen before,” said Steiner.
Ocado and Marks and Spencer (MKS.L) last year agreed to create a joint venture — a move that saw M&S acquire a 50% stake in Ocado’s retail business for £750m.
Ocado Retail is now the fastest-growing grocer in the UK, and now has a 1.7% share of the country’s grocery market.
The supermarket said Ocado Retail was on track to switch over from Waitrose to M&S as its food supplier in September.