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LONDON (Alliance News) - Ocado Group PLC Tuesday reported a small decline in profit in the first half of its financial year even though sales grew, as it booked costs associated with investments, distribution and administration.
The online grocery business, which last year teamed up with Wm Morrison Supermarkets PLC to be its online delivery company, said pretax profit in the 24 weeks ended May 17 slipped to GBP7.2 million from GBP7.5 million in the same period the year before, despite revenue rising 18% to GBP507.7 million from GBP429.7 million.
Ocado said that sales were driven by continued growth in its retail business and benefited from its agreement with Morrisons, with the number of loyal customers increasing. Average orders per week grew to 191,000 from 161,000, although this was partially offset by a decline in the average order size to GBP111.68 from GBP114.43.
However, profit held back by investments in initiatives to support future growth of the business, higher depreciation and amortisation arising from the Dordon customer fulfilment centre, and competitiveness and deflationary pressures in the market, Ocado said. Total distribution costs and administrative expenses rose by 22.6%, while total depreciation and amortisation costs rose by 12.8%.
"Our continuous commitment to constant innovation in technology not only allows us to give industry-leading service to our customers at home but to offer our end-to-end platform solution to retailers outside the UK. We are excited by the possibility and reiterate our target of signing a first agreement during 2015," Chief Executive Tim Steiner said in a statement.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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