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Ocado sales growth slows as online boom eases

Ocado has signed a new partnership with Auchan Retail

Ocado Group PLC -
Robot take up has been slower than expected

Ocado Group PLC (LON:OCDO) said sales growth had slowed as the online sales boom sparked by the pandemic lockdowns returns to a more normal pattern.

Revenues in the half-year to end May rose by 21% to £1.32bn compared to 40% growth in the first quarter.

Underlying profits more than trebled to £61mln though after exceptional items including impairment charges of £104mln there was a pre-tax loss of £23.6mln (2020:£40.6mln).

Tim Steiner, chief executive, said:  "As we head towards a post COVID-19 future, it is increasingly clear that the landscape for grocery worldwide has changed, for good.

“Over the last eighteen months, we have shown that the Ocado model works even in the most challenging and fluid of environments.”

Steiner also confirmed that Ocado was speeding up the roll-out of its mini customer fulfilment centres (CFC) with 56 now committed and 15 under construction.

The first site, at Bristol, is now running at 50% capacity, he added, though the adoption of its Kindred robotic technology has been slower than expected.

Going forward, Steiner said the group still expects a strong second half in retail but this will be offset by a £30mln lower contribution from international, UK solutions and other segments.

Kindred will account for £10mln of this along with an IT upgrade and deferred payments.

Ocado also announced it had signed up another major international partner with Spain’s Alcampo chain to use its online shopping platform.

Alcampo is owned by Auchan Retail, a global operation with €32bn in revenues.

In Spain, Alcampo operates 310 stores comprising 62 hypermarkets and 248 supermarkets generating revenues of €4.5bn annually.

Ocado said it expects this deal to create significant long-term value to the business but have a negligible impact on earnings in the current financial year as no cash fees will be recognised in revenue until operations commence.

Quick facts: Ocado Group PLC

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Price: 1646.5 GBX

Market Cap: £12.35 billion

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