Ocado achieves double digit growth in 2012

Date : 07 February 2013
Ocado has confirmed gross sales grew by 11.4% to £716.2m for the 52 week period of 2012. The pure play retailer expanded its range by 40% during the year to reach 28,000 SKUs, as CEO Tim Steiner aims to move from 'supermarket to hypermarket' status. EBITDA was up 20.4% to £33.5m, although the retailer recorded a loss before tax of £1.0m this narrowed to £0.6m looking at the 53 year period. Gross margin remained stable year on year at 33%.

Range expansion and private label key drivers

Growing the range by 40% has been a key driver for Ocado, with specialist ranges such as 'free from' and regional food deepening customer choice and encouraging loyalty and repeat shopping. Private label sales were up over 70% year on year, with 77% of baskets containing Ocado own brand products, demonstrating a clear desire for value and reaching out to a broader customer demographic, especially outside of London. Postcodes inside the M25 account for just under half of Ocado's business. An additional value driver is the group's low price promise that matches prices including promotions and private label to Tesco; according to management the initiative has 'encouraging early results' and is moving price perceptions among shoppers.

2013 pivotal for growing capacity

2013 will be a pivotal year for Ocado as it seeks to significantly grow capacity, both in non-food with dedicated ranges served from a new site in Welwyn with dedicated web shops, but more importantly through the opening of its second food warehouse (CFC2) in Warwickshire, with go-live confirmed for the end of February. This site will in theory lift any capacity constraints the grocer has been operating under for many years and create more or less unlimited headroom to grow. It is worth noting that the new facility is equivalent to around 15-20 dark stores (fulfilment warehouses for online operated by multi-channel grocers) at full capacity, and will turn on at the equivalent of 10-15 dark stores, according to management.

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