Ocado profits double in the last six months as pandemic pushes families online to get their groceries
Ocado raked in half-year sales of £1billion for the first time ever as founder Tim Steiner declared ‘the world has changed’.
The coronavirus pandemic has pushed millions of families online to get their groceries, with uptake strongest amongst the over-65s.
The group reported a 27 per cent jump in retail revenues to £1billion due to ‘unprecedented’ demand during the six months to May 31.
Ocado reported a 27 per cent jump in retail revenues to £1bn due to ‘unprecedented’ demand during the six months to May 31
This helped retail profits jump 87 per cent to £45.7million, once extra costs from staff bonuses, testing and PPE were taken into account.
Steiner, who founded the firm 20 years ago, said: ‘The world as we know it has changed.
As a result of Covid-19 we have seen years of growth in the online grocery market condensed into a matter of months – and we won’t be going back.’
He added he was confident this would lead to a ‘permanent redrawing of the landscape of the grocery industry worldwide’.
The group still made a loss as it ramped up investment in high-tech robotic warehouses for supermarkets abroad.
But the loss narrowed from £147.4million to £40.6million.
It also opened its first robotic distribution warehouses for Casino in Paris and Toronto.
Search to replace chairman Rose starts
Stepping down: Lord Rose has been Ocado’s chairman since 2013
Ocado has begun the hunt for a successor to Lord Rose, who has been the online grocer’s chairman since 2013.
The former boss of Marks & Spencer, who helped lead the campaign to keep Britain in the EU, is one of the City’s best-known businessman.
He plans to step down next year, and could concentrate on private business interests.
Rose, 71, was an early victim of coronavirus.
On recovery he said he ‘felt like I’d been hit by a bus’. For Ocado the virus has been a boon, turbo-charging the online grocery sector.
If Rose were to leave and sell his shares today, would make £8.9million – £4millionm more than he would have in April.
He sold £1.6million worth in February, following two sales worth around £7.3million in May 2019.
Yesterday, Ocado founder Tim Steiner said: ‘He’s been with us for eight years, but we have no official comment.’
During lockdown the proportion of groceries sold online has increased from 7 per cent to 14 per cent, and Steiner predicted it would double again in the next few years.
Monthly online sales rose sixfold in the UK in August, compared to the same month last year, and doubled in China, according to Ocado.
The rapid change across the globe has turbo-charged its share price and boosted Steiner’s wealth.
Although its shares fell 2.2 per cent to 1988.4p yesterday, they have gained 87 per cent since the end of February. Steiner’s holdings are now worth £538million.
The group raised more than £1billion last month issuing equities and bonds to support its growth.
That will also be used to help sign up new partners to use its technology and to invest in innovation at a faster pace.
Retail expert James Grzinic, at Jefferies, said: ‘Ocado’s first-half results show the benefits from the surge in online demand brought about by Covid-19, albeit one temporarily enabled by consumers’ willingness to take very large deliveries in unusual slot times.’
In the hour that Boris Johnson announced lockdown back in March, Ocado had as many visitors to its website as in the previous quarter.
The company now has 1m customers on its waiting list ready for when it can build more warehouses and boost demand even further
It is hiring 500 technology staff in the UK, and increasing capacity for domestic shoppers by 40 per cent next year with three new warehouses.
The FTSE 100 firm has suggested that as the online grocery market expands, traditional supermarkets such as Tesco and Sainsbury’s will be unable to compete with its robotic version.
At the moment they use workers to gather goods for deliveries by walking around the store, placing a limit on the number of orders that can physically be picked.