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(Alliance News) - Ocado Group PLC on Tuesday reported a slimmed half-year loss as it unveiled a partnership with Auchan Retail to develop Alcampo's online business in Spain.
The FTSE 100-listed online grocery fulfilment business said its new partner, Auchan Retail, has operations across 13 countries and operates the Alcampo brand in Spain via a network of 310 stores with revenue totalling EUR4.5 billion in 2020.
There has been a significant acceleration in online grocery shopping in Spain during the pandemic, Ocado said, and the partnership will allow Alcampo meet growing demand for competitively priced, high quality grocery e-commerce.
Ocado and Alcampo will initially build a customer fulfilment centre to serve the Madrid region from 2024, with additional automated warehouses to be announced at future dates. The fee structure with Alcampo is similar to that agreed with other international Ocado Solutions partners.
Ocado and Auchan Retail also will explore the potential to extend their partnership into other geographies.
"The appetite for our unique end-to-end platform remains strong as retailers look to take advantage of the channel shift which is now redrawing the landscape of the global grocery market," said Chief Executive Tim Steiner.
Ocado said the Auchan deal will have a negligible financial impact on the current financial year, as fees will not be received until operations start in 2024. The deal will require minimal additional capital expenditure in the current year, but more in the 18 months just prior to the start of operations.
Separately, Ocado said revenue for the half-year to May 30 was GBP1.32 billion, up 21% from GBP1.09 billion a year ago, while the online grocer's pretax loss slimmed to GBP23.6 million from GBP40.6 million.
Sales growth in the period was driven by strong demand for Ocado Retail - its joint venture with Marks & Spencer Group PLC - and the increased popularity of online grocery shopping in response to Covid-19.
The Hertfordshire, England-based firm said that, since expanding its delivery capacity, average orders have increased to 356,000 each week in its first half, up 20% year-on-year.
Customer numbers slightly outstripped the increase in orders, indicating that the average basket size has dropped since restrictions eased, despite remaining "significantly above" pre-pandemic levels.
Once again the company decided against declaring an interim dividend.
Though uncertainty remains over the performance of Ocado Retail in the second half of the year as pandemic restrictions ease, Ocado said it is encouraged by its performance in the second quarter which showed a strong increase in customer transactions offsetting a normalisation in average basket value.
However, it now expects a GBP30 million lower earnings before interest, taxes, depreciation and amortisation contribution between the International Solutions, UK Solutions & Logistics and Other segments.
"Overall, taking into account the encouraging performance of Ocado Retail, with these incremental investments and other impacts we are maintaining our full year outlook and do not expect a material change to consensus group Ebitda forecast," the company added.
Shares in Ocado were trading up 1.4% at 2,012.00 pence each in London on Tuesday morning. M&S shares were marginally lower at 157.09p.
By Scarlett Butler and Lucy Heming; scarlettbutler@alliancenews.com; lucyheming@alliancenews.com
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