Supermarket Ocado edges towards profit

ONLINE grocer Ocado yesterday narrowed year-end losses from £2.4m to just £600,000 as it edged ever closer towards profitability, easing the concerns of long-suffering investors.

Shares in the company, which has not made a profit since it began trading thirteen years ago, yesterday closed up 11 per cent at 115.9p. This is still well below the 180p charged at its July 2010 float.

Total sales for the year to 2 December rose 11.4 per cent to £716m and Ocado says it dealt with 140,000 orders in its busiest week of 2012.

However chief executive Tim Steiner insisted the business, which largely sells Waitrose products, is a good bet for long-term returns, in part thanks to its decision to open a second distribution centre in Warwickshire. At the moment all Ocado orders are processed at one site in Hatfield, Hertfordshire.

“We continued to achieve double digit sales growth during 2012 with increasing rates of sales and new customer momentum as we moved into 2013,” Steiner said. “In 2013, we will continue to improve the attractiveness of Ocado to customers and we shall substantially increase our capacity with the opening of our second fulfilment centre, creating over 1,000 jobs in the Midlands.”

The business, set up by three former Goldman Sachs bankers, was boosted last month when former Marks & Spencer boss Stuart Rose agreed to be its next chairman.

The company is regularly touted as a possible bid target for M&S as well as bricks-and-mortar supermarket rival WM Morrison, as neither has a significant online grocery business.