Yahoo Finance Ocado plunges £211m into the red as online customer orders dwindle
Online supermarket Ocado fell £211 million into the red in the first half of the year as soaring grocery inflation and the end of lockdown restrictions led to a slump in the value of customer orders.
Revenue for the first six months of 2021 fell 4.4% to £1.3 billion, led by a more than £100 million drop in retail sales as customers abandoned home delivery of groceries as Covid rules relaxed. The average shopping basket fell 13% on last year.
Group CEO Tim Steiner said “despite the near-term challenges facing the consumer” the business was in “a strong financial position” with “ample liquidity to fund the requirements of our existing and expected customer commitments into the mid-term.”
But Alex Smith, global sector lead at research firm Third Bridge, said: “With a biting cost of living crisis unfolding, Ocado’s heydays as a pandemic-era darling now feel like a distant memory.”
The results come just two days after the grocery delivery and logistics firm announced the departure of retail CEO Melanie Smith at the end of July, with deputy CEO Lawrence Hene taking over as interim CEO until a successor is found.
Smith oversaw a 52% drop in the Ocado share price since the start of the year after the company reported stagnant growth. Ocado group CEO Tim Steiner said Smith’s departure was not related to the firm’s current trading.
Ocado is betting its heavy investment into robotics and machine learning for its logistics and distribution operations will be enough to reassure investors that long-term profitability will supplant short-term losses. The company says it is already working with 11 leading grocers to provide the technology for their online grocery operations.
“Although Ocado is the leader in the warehouse picking robotic technology, our experts say it is still at least three to four years away from becoming a pure-technology company,” Alex Smith said. “The technology part of Ocado’s business remains tiny even though it grew by 300% last year.”
The company has come under fire for its generous reward packages for group CEO and co-founder of the business, Tim Steiner, who received a £54 million bonus in 2020.
In May, almost a third of Ocado shareholders voted against a remuneration package that would see bosses rake in £20 million in pay.
In 2019, the company announced a joint venture with supermarket Marks and Spencer in a £750 million deal which saw Ocado market M&S food online for the first time and deliver M&S products to shoppers’ front doors.
Ocado shares fell 5% to 736p today.
