Ocado reports profit as it partners with French brand
Online grocer Ocado has announced its first interim pre-tax profit after suffering a £6.7m deficit in the same period last year.
Ocado reported pre-tax profits of £200,000 in the first six months of this year, with sales rising almost 21% to £296.7m for the 24 weeks to 15 May.
However, the share price tumbled as analysts remained cautious about its ability to keep up with demand and dangers from a competitive market. Waitrose’s expansion of its direct delivery service into the Ocado heartland is seen as a direct challenge, while the online threats from ‘click and collect’ services offered by Sainsbury’s, Tesco, Morrisons and Marks & Spencer are seen as more customer-friendly than Ocado's model.
Tim Steiner, Ocado’s chief executive officer, said: “Strong customer demand for the Ocado service has delivered profitable growth, limited only by our operational capacity. We are focused on increasing capacity to meet demand and improve delivery timeliness and order accuracy.
As well as announcing investment of £80m to boost capacity, the company has signed a deal with French supermarket Carrefour to supply mid-range traditional French food label, ‘Reflets de France’, to the UK market.
Steiner said: “We are delighted to announce our new supply partnership with Carrefour, an important development in our strategy to offer the broadest and most diverse grocery range to all our customers in the UK.”
Ocado called the partnership an important step in its strategy to offer the broadest and most diverse grocery range to customers, one that it was uniquely positioned to deliver. It said: “We believe the addition of this authentic and historic French range will complement our existing lines from our partner Waitrose and will be a welcome broadening of our range for our customers.”
Reflets de France was launched by Carrefour in 1997 to showcase locally sourced products, which are considered part of traditional French gastronomic heritage, and to support small to medium-sized enterprises. The range comprises 300 products, pâtés and cured meats to biscuits and cheeses.