Ocado warns of bigger pretax loss than expected this year

Online supermarket has divided analysts like few other stocks

Delivery vans at the Ocado centre in Andover, England. Photograph: Peter Nicholls/Reuters

Delivery vans at the Ocado centre in Andover, England. Photograph: Peter Nicholls/Reuters

 

British online supermarket Ocado warned its pretax loss this year would likely be larger than market expectations due to a step up in investment and management bonuses. Shares in the company have rocketed about 250 per cent over the past year thanks to four major technology partnership deals, putting managers in line for hefty stock price-related payouts.

However, the shares fell as much as 7.5 per cent on Tuesday, as Ocado reported a first-half pretax loss and flagged a larger one than currently expected by analysts for the full year, due in part to investment in its distribution centres and technology. Prior to the warning, analysts’ average forecast was for Ocado to make a 2018 pretax loss of £16.1 million (€18.2 million), versus a loss of £500,000 in 2017.

Ocado, founded by three former Goldman Sachs bankers in 2000, has divided analysts like few other stocks. Some view its home deliveries from giant high-tech distribution centres as the future of grocery shopping, while others see it as a costly and complicated venture that will never make sustained profits. Its technology deals have put a fire under the shares in the past year, propelling the company into Britain’s Ftse-100 blue-chip index. But analysts are similarly divided over whether they are the start of a steady stream of such partnerships or not. – Reuters