Ocado has reported a leap in annual sales and core profitability as wider retail figures highlight the sharpest drop in business since May amid continuing coronavirus lockdowns.
Ocado, best-known as an online grocer but also a provider of robotic warehouse technology, was the latest supermarket-style business to confirm a boost from its status as an essential retailer.
Its retail business, through a partnership with Marks and Spencer (M&S) since September, recorded a 35% leap in revenue during the year to 29 November to just under £2.2bn thanks to surging demand for deliveries during the COVID-19 pandemic.
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Group revenue rose by a third to £2.3bn helping underlying profits to hit £73.1m – up from £43.3m in the previous year.
It reported a bottom line loss before tax of £44m though that was down significantly on the £214.5m in 2018/19.
Shares, which have more than doubled over the past year, were 2% down in early deals.
The extraordinary growth in its market value in recent years has mainly been a result of high demand abroad for its warehouse technology but the pandemic has proved a gift for its core offering.
Ocado chief executive Tim Steiner told investors he expected shopper numbers to continue to grow as a study by market researcher Nielsen reported that the online share of all grocery sales hit a record high of 16% in January.
“Historically, we’ve always seen when customers have done this three to five times they tend to stick with it, so it’s likely that it will just keep growing,” he said.
But wider industry data painted a bleaker picture with a post-Christmas hangover for physical store sales as COVID curbs continue to shutter shop doors among those deemed non-essential.
The British Retail Consortium reported a 1.3% fall in total retail sales – driven by non-food.
Barclaycard data suggested the fastest decline in monthly sales since May last year as the pandemic’s effects on earnings dented enthusiasm for big purchases.
In sharp contrast, Ocado confirmed its expansion plans were continuing apace with three new warehouses planned for 2021 in the UK.
It expected the sites would increase its overall capacity by 40%.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said Ocado was “leading the charge” in terms of the online grocery revolution.
She said: “Ocado isn’t just benefiting from those wanting, or indeed needing, to order their food online during lockdowns.
“It also has a hand in helping other stores up their delivery game, with software designed to make picking easier, among other handy benefits.”