Groceries delivery firm Ocado is still losing money, albeit at a slower rate, but reckons its sales growth in 2011 outdid others in the sector, while top-line growth in 2012 should accelerate once its sorts out its capacity constraints.
Gross sales, which include revenue plus value added tax (VAT) and marketing vouchers, rose 16.6% in the 52 weeks to November 27th to £642.8m from £551.1m the year before.
The group said its top line growth has continued into the current financial year, and it expects year-on-year sales growth in the first quarter to be around 10%, more or less in line with growth in the preceding quarter. As the company sorts out its capacity constraint problems, it expects the growth rate to improve as the year wears on.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
The statutory revenue figure was £598.3m, up 16.0% from £515.7m, but shy of the £608.82m that was the market consensus.
Latest Videos FromMoneyWeek
Statutory loss before tax was slashed to £2.4m from a loss of £12.2m the year before; the market had been expecting a loss of £2.01m.
The company prefers to focus on earnings before interest, tax, depreciation and amortisation, or EBITDA, however, and this climbed 26.6% to £27.9m from £22.0m the year before. The EBITDA margin improved to 4.7% from 4.3%.
The company finished the financial year with net debt of £19.2m, having been cash positive to the tune of £80.5m a year earlier. Cash and cash equivalents as at November 27th stood at £92.1m, versus £154.6m (including treasury deposits) a year earlier, due to the continued capital investment required to expand the business.
Customer demand during the year continued to exceed Ocado's operational capacity, due in part to operational difficulties at the group's distribution depot in Hatfield, just north of London. The company is building a second distribution hub at Dordon in Warwickshire and is investing to increase capacity at Hatfield. The building, services and ancillary infrastructure at Dordon are substantially complete, the company revealed.
Average orders per week increased by 18.6% to 110,219 from 92,916 in fiscal 2009/10. The average order size decreased by 1.7% to £112.15 from £114.06 the year before, however, which the group attributed to an increasing number of customers signing up to the Ocado Delivery Pass scheme. The number of active customers increased by 13.5% to 298,000 at the end of the year.
Items delivered exactly as ordered eased to 98.3% in the period from 99.0%) while the proportion of deliveries delivered on time or early also declined, to 92.3% from 94.9% the year before.
"Against the backdrop of a weak UK economy, we have continued to see the development of the online grocery retail market. We believe this growth is evidence of a structural shift in consumer behaviour and we will continue to see an expansion of the online grocery retail market," revealed Tim Steiner, Chief Executive Officer of Ocado.
"Competition in the online grocery sector is as strong as the traditional store-based sector, and will almost certainly increase," Steiner opined, adding that, in his view, the biggest threat to the growth of the online grocery market is under-investment in capacity.
The loss-making company does not pay dividends.
jh
