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Published On: Tue, Jul 2nd, 2013

Ocado shows signs of growth yet losses increase

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The online food retailer Ocado has filed losses of £3.8 million, despite showing growth in almost every measurable area. The company, which was recently bought out by Morrisons, attributed the losses to the opening of its brand-new warehouse and a deal with its new owners which sees them take on board the home delivery aspect of the Morrisons business.

Ocado’s sales grew by more than 15.5 percent, breaking the £355 million mark. Additionally, their average order, known within the industry as “basket spend”, increased to almost £115. This figure is important because it shows that they are selling their products wisely and continuing to improve their monetisation.

While the company are primarily a food retailer, they have recently been moving into non-food products with great success. So much so that they have now opened a warehouse in the south-east of England specifically for the large majority of the nonedible products that they offer their 360,000 customers.

While the company has never actually recorded a profit, pre-tax or otherwise, they share price has risen quite dramatically – particularly after the Morrisons deal was confirmed. Upon the announcement of their increasing losses this morning, their stock plummeted from a peak of 317p to 293p, a 6 percent decline. However, once the dust began to settle, investors began to feel that the stock was undervalued and drove it higher to the closing price of 309p. While this still represented a decline of more than 1 percent of the day, it shows that the markets have faith and not only Ocado but also online food retailing as a whole.

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About the Author

- Gregory previously worked for a leading financial news publication and is now assistant news editor of financialtrading.com.

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