Ocado delivers record sales – but still manages to make a £44m loss after investing in technology
Ocado posted sales of more than £2billion for the first time despite losing customers in the pandemic.
Revenues in its retail division, which is half-owned by Marks & Spencer, rose 35 per cent to £2.2billion last year, despite the number of customers falling from 795,000 in 2019 to 680,000 in 2020.
But that lower figure featured customers who shopped more often and spent more each time. The new range of M&S products has been well-received, bosses said.
Robo shoppers: Ocado has continued to invest heavily in technology, which has resulted in an overall loss before tax of £44m, down from a £214.5m loss in 2019
But as the company continued to invest heavily in technology, it posted an overall loss before tax of £44million, down from a £214.5million loss in 2019.
The pandemic has turbo-charged demand for online groceries, which make up a record 16 per cent of the UK market.
Ocado chief executive Tim Steiner said: ‘Millions of people have tried online grocery for the first time.
‘Generally they see the benefit and won’t be going back.’ He predicted online grocery would continue to grow even after the vaccine rollout.
Average orders per week rose from 325,000 in 2019 to 334,000 in 2020. And the average order rose from £106 to £137.
This compares to an average supermarket basket size of around £25 in-store and £85 online.
Critics say it is still not able to say when it will return sustainable profits, 20 years after it was founded.
Clive Black, of Shore Capital, said: ‘Ocado has torn up the financial script in being a perennially capital-hungry experiment that delivers no financial returns.’
Ocado’s ability to license its robotic technology is what underpins its £20billion valuation, and reflects bosses’ belief they can take a chunk of the developed world’s £2.8trillion grocery market.
It has signed deals with Kroger in the US and Aeon in Japan, and plans to boost UK capacity by 40 per cent.
Boss’s pay cut… to £7m
Ocado boss Tim Steiner saw his pay fall 88 per cent in 2020 – but he still received £7million.
The package, featuring £6.2million of bonuses, made him the UK’s best paid supermarket boss even though it posted a loss.
He has been paid £86.5million since 2011, including £59million in 2019. His shareholding is also worth £580million, thanks to a 150 per cent jump in the share price in the last 12 months.
The stock’s performance triggered a special bonus, part of the £100million plan, which allowed him to bank 2.5m shares.
This holding, worth £66.2million yesterday, will vest over future years if the stock does not fall.