Shares in the Ocado Group have dropped this morning after the grocery giant reported a wider loss for its latest fiscal first half, even as retail revenue fell sharply.
For the 26 weeks to 29 May 2022, retail revenue was down 8.3% to £1.12bn, while overall group revenue dipped by 4.4% to £1.26bn. Meanwhile, it reported a pre-tax loss of £211.3m, compared to a loss of £27.9m last year. Ocado also reported an EBITDA loss of £13.6m, compared to EBITDA of £61m in 2021.
The results fell short of analysts’ expectations, prompting its share price to fall by about 4.5% as of 11am BST.
At the Ocado Retail unit, the number of active customers rose by 12% year-on-year to 867k, but revenue fell as the average basket spend fell by 13% to £120, hurt by a 15% drop in basket size.
Despite the results, CEO Tim Steiner maintained an upbeat tone, saying the group remained on track to meet its previous forecast for the full year (low single digit revenue growth at Ocado Retail and low single digit margin EBITDA growth).
Steiner noted: “The last six months has seen significant progress at Ocado Group and we have put all the building blocks in place to deliver profitable growth and strong cash flows … Following our recent successful financing, we now have a strong financial position and ample liquidity to fund the requirements of our existing and expected customer commitments into the mid-term … With these building blocks in place, notwithstanding the near-term challenges for the consumer in the UK, we look forward to the future with confidence”.
NAM Implications:
- Given the rate of unprecedented global change…
- Coupled with the growing appeal of Ocado web services…
- …there will come a time when spinning off Ocado Retail will allow Ocado to focus on optimising its real potential.
- Perhaps this fall in share price will move the issue up the agenda.
- (besides prompting M&S to complete an obvious acquisition?)
