Grocer plants seeds of £200m growth
Online grocer Ocado has reported a 20.5% jump in earnings amid price increases and a cut in promotions and is now exploring plans to raise at least £200m to fund further growth.
The online retailer said underlying earnings rose to £37.6m in the 22 weeks to April 30, compared to £31.2m in a similar period covering the 20 weeks to April 17, following changes to its financial calendar.
Pre-tax profit rose 45.7% to £6.7m amid a "reduced number of promotions" and "limited" price increases for some products.
And revenue was also boosted by 24.7% to £600.4m thanks in part to its delivery deal with high street supermarket Morrisons.
The grocer released its financial results as it announced plans to raise fresh funding.
It plans to raise funds through senior debt that will be used in part to repay its revolving credit facility as well as bankroll company expansion.
"The proceeds of the offering will support the continued growth of our UK retail capacity, and further improvements to our proprietary platform," Ocado said.
It is understood that Ocado would be looking to raise a minimum of £200m through the issue.
Ocado shares were down 2.7% following the release.
Bruno Monteyne, a senior food retail analyst at Bernstein, said adjusted earnings were only in line with pessimistic forecasts and claimed its fundraising plans confirmed Ocado's cash-poor position.
"The offer is in line with our expectation that the group is stretched for cash and would require additional new financing for further growth," he said.