Ocado claims the title of fastest growing UK grocer

The online supermarket has now set its sights on international expansion

Article updated: 11 February 2020 9:00am Author: Joe Healey

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  • Final year results show 10.3% retail revenue growth, while on a group level revenues rose by 9.9%
  • A combination of heavy investment, accounting changes and disruption associated with the impacts of the Andover fire meant pre-tax profits fell below expectations
  • On the international front, the Group is planning to open its first purpose-built facilities in France and Canada for Sobeys and Casino respectively in the first half of 2020
  • Recommendation: With shares difficult to value and the Group’s still uncertain outlook, we currently view Ocado as a ‘Hold’ for investors willing to accept a medium level of risk

Ocado released final year results this morning, showing 10.3% retail revenue growth and making them the fastest-growing UK grocer. On a group level, revenues rose by 9.9% and pre-tax profits came in below expectations at a loss of £214m. However, this was largely due to a combination of heavy investment, accounting changes and disruption associated with the impacts of the Andover fire. EBITDA was down 27% at £43.3m and the group also raised 600m through a convertible bond issuance in December, bringing funding up to roughly £751m.

These results were always going to show some effects of drag from investment and the knock-on impact of the Andover fire. However, what investors will be most interested in is the underlying performance of its Retail and UK Solutions & Logistics segments, both of which posted double-digit EBITDA growth.

On the international front, the group are planning to open its first purpose-built facilities in France and Canada for Casino and Sobeys respectively in the first half of this year. This has resulted in a heavy-investment outlook which the group have outlined to be £600m in the current financial year.

It is clear Ocado are operating in a secular niche and are providing a leadership role in the evolution of the grocery retailing market, but it is still too early to say whether they have pushed too hard too soon. However, with growth starting to develop well in domestic markets, this should provide investors with some optimism. The crucial factor will be how international consumers respond to their service once operational, which we should begin to see in H2.

With shares difficult to value and a still uncertain outlook, we currently view Ocado as a ‘HOLD’ for investors willing to accept a medium level of risk.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Joe Healey

Investment Research Analyst

Following his completion of the graduate scheme, Joe is an Investment Research Analyst covering equities. He holds a BA Hons Business Management degree and is currently studying towards CFA Level II after passing CFA Level I in June 2019.

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