Ocado DC spending weighs heavily on profits

Ocado has reported a sales rise of 12% to £1.48 billion alongside a pre-tax loss of £44.4 million for the year ending 2nd December 2018, compared with £9.8 million in the previous 12 months.

The online retailer has inked various high profile outsourcing deals in recent times, including Casino in France, Sobeys in Canada and Kroger in the US. However, building infrastructure for these customers doesn’t come cheap and is hitting its profitability and cash flow hard.

"We now have in place a platform for significant and sustainable long-term value creation as the leading pureplay digital grocer in the UK, a world-leading provider of end-to-end e-commerce grocery solutions, and as an innovative and creative technology company applying our proprietary knowledge to a range of challenges,” says Chief Executive Tim Steiner.

“Our transformation journey is well under way with increased cash fees earned and greater investment as we execute on behalf of our partners. Creating future value now will involve us continuing to scale the business, enhancing our platform, enabling our UK retail business to take advantage of all its opportunities for growth, and innovating for the future.”

There was no mention of recent reports that Marks and Spencer is in talks to buy distribution centres, delivery vans and lorries from Ocado as it ramps up its food delivery service plans.