Ocado losses triple on robot roll-out costs: Shares slump 12.9% as online grocer warns investment in tech will continue eating into profits
Ocado lost £1.4billion in value after the online grocer warned its huge tech investment would continue eating into profits.
Shares fell 12.9 per cent, or 182p, to 1225p as it posted a £176.9million loss for the year to November – more than triple the deficit a year earlier.
It said that losses will continue as it invests £800million this year in its robot grocery delivery technology.
Tech investment: Online grocer Ocado has warned that losses will continue as it invests £800m this year in its robot grocery delivery technology (pictured)
In the year to November it spent £680million, up from £526million a year earlier. The profit warning wiped £39million off chief executive Tim Steiner’s 3 per cent stake.
Shore Capital retail analyst Clive Black said yesterday: ‘They are 22 years into business and have announced very considerable losses that are going to continue for the foreseeable future.
‘I think today is an inflection point where we have to ask if Ocado, despite all its techno babble, is just a loss-making business.
‘There does not seem to be a pathway to it breaking even, let alone offering investors attractive returns.’
AJ Bell investment director Russ Mould said Ocado has a reputation of being ‘all talk and no profit’.
He said: ‘Investors are getting tired of hanging around for the big earnings breakthrough and its share price has more than halved over the past 12 months.’
The grocer was founded in 2000 by a trio of former Goldman Sachs bankers and now has seven warehouses across the UK delivering shopping for Morrisons, Marks & Spencer and its own brand of groceries.
It has increasingly focused on selling its warehouse technology to overseas supermarkets, including US giant Kroger.
Group sales rose 7.2 per cent to £2.5billion last year, driven by a 4.6 per cent rise in sales to £2.3billion at its UK grocery business, which is a joint venture with Marks & Spencer.
Ocado was held back by labour shortages at the end of the year and a fire at its warehouse in Erith, Kent, which reduced capacity for months.
It also said shoppers’ baskets were getting smaller as they return to pre-pandemic habits.
Steiner said the year demonstrated demand for online groceries was ‘here to stay’.
He said: ‘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.’