Web grocer Ocado gets first profits in 12 years
Online grocer Ocado is on course for the first annual profit in its 12-year history after results showed a big swing in its half-year performance.
The company, which recently entered into a joint venture with Morrisons to run the supermarket's online operation, made a profit of £7.5m in the six months to May 18, against a £3.8m loss a year ago.
Shares still dived 5% yesterday amid fears about future growth in the face of a fiercely competitive supermarket sector.
Even though its average orders rose 15.8% to 161,000 per week in the half year, the average size of a customer's shopping basket slipped to £114.43 from £114.90.
Chief executive Tim Steiner also forecast that online shopping will grow at a slower rate than in recent years, albeit at a faster rate than the wider market.
Ocado, which delivers Waitrose and its own products to much of the UK, faces increasing competition from the online operations of major supermarkets as the industry is dragged into a price war.
Why customers here can't Wait any longer
By Margaret Canning, Business Editor
Sometimes business is all about the long game. And yesterday came a reminder that even grocery retail doesn't always yield overnight successes.
Online grocer Ocado has made a profit of £7.5m over the six months to May 18, compared to a £3.8m loss a year earlier.
It leaves the high-end retailer on course to make its first annual profit in its 12 years.
The company is backed by John Lewis Partnership, and sells Waitrose products, as well as some branded lines. It's beloved of many Irish and Northern Ireland people living in Blighty because of its Irish and Northern Irish aisles, purveying delights like Rankins potato farls, Barry's Tea, Mash Direct's prepared vegetables and even Thompson's tea bags. However, it doesn't yet deliver to Northern Ireland.
Shares still dived 5% after the results were announced, thanks to concerns about competition in the supermarket sector.
Kantar Worldpanel has said growing competition between supermarket competitors has dragged price inflation in the sector down to its lowest level for almost eight years.
Ocado obviously has a happy relationship with Waitrose but the latter has had a cautious relationship with Northern Ireland. We've heard frequent reports that it has been on the verge of signing up – usually to a site in a 'desirable' area like Holywood in north Down or the Lisburn Road in south Belfast.
But it's never quite happened – although its agriculture director Duncan Sinclair recently gave a tantalising hint that Northern Ireland could finally be on its radar.
He told a farming conference in April that convenience stores and online trading were giving it plenty of scope for expansion. He said it hoped to open 200 of its Little Waitrose format stores by 2020 – and for once, growth would not be confined to the sunny south-east of England.
He said a distribution centre in Lancashire would be used to develop the business "potentially across into Northern Ireland".
If Waitrose finally does open in Northern Ireland – and if Ocado widens its delivery service – shoppers will have the choice they have been itching for.