Shares in Ocado (LON:OCDO) have taken a hit this morning as the online grocer revealed that it had made a loss in the first half of its financial year. The company, which recently joined the benchmark FTSE 100 index, however, reassured investors that it still expects to deliver a rise in Retail revenue this year.
As of 08:39 BST, Ocado’s share price had given up 2.50 percent to 986.20p. The stock is significantly underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.14 percent higher at 7,698.42 points.
Ocado swings to HY loss
Ocado reported in a statement this morning that it had made a loss before tax of £9 million in the first half of its financial year, as compared with a £7.7-million profit in the prior-year period. The group’s retail revenue, however, rose to £736.6 million during the reported period, up from £659.9 million a year ago.
“This is a transformational period for Ocado,” the group’s chief executive Tim Steiner commented in the statement. “In order to fully capitalise on the opportunities ahead of us, we are working at pace, investing more and focussing sharply on execution to bring on new capacity in the UK.”
The FTSE 100 group said that it was ‘confident’ in achieving revenue growth in its Retail business of between 10 percent and 15 percent this year as it increases its fulfilment capacity and grows market share in the UK.
Analysts weigh in on results
Tom Stevenson, investment director at Fidelity Personal Investing’s share dealing service, told City A.M. that Ocado’s first-half loss reflected ‘investment in an exciting future’.
“No one is really focused on its results in the short term. Rather it is the enormous potential of what looks like becoming the platform of choice for the online grocery business,” he pointed out.