Ocado sinks as annual losses widen, co-founder steps down

4th Feb 2014 07:48

- Loss before tax widens to 12.5m pounds, from 0.5m pounds- Gross sales grow 18.6 per cent- Expects to grow in line or ahead of market in 2014- Co-founder Jason Gissing steps downAnnual losses at online grocery group Ocado widened considerably last year despite decent top-line growth as costs and expenses soared.The results came alongside the news that the group's co-founder and current Commercial Director, Jason Gissing, is to retire. Gissing, who has previously worked as Ocado's Chief Financial Officer for almost 10 years, will leave in May to spend more time with his family, the company said.Ocado, which signed a "transformational" agreement with supermarket group WM Morrison last year to help roll-out its own online delivery service, reported gross sales of £852.4m during the 52 weeks ended December 1st, up 18.6% on the year before. Gross sales include revenue plus VAT and marketing vouchers.However, the loss before tax totalled £12.5m, compared with a loss of just £0.5m in 2012.Total administrative expenses came to £69.6m during the period, up 45% on the year before. Meanwhile, distribution costs increased by 20.1% to £200m, though remained relatively stable as a percentage of revenue.Pre-opening costs for the Customer Fulfilment Centre in Dordon (dubbed CFC2) and the company's first dedicated Non-Food Distribution Centre (NFDC) also weighed on the bottom line, as well as legal and advisory fees for the Morrisons transaction.Ocado signed a 25-year agreement with Morrisons in May 2013 to launch and operate its new online grocery business, Morrisons.com, which went live last month. The joint venture will see the company employ 1,000 additional employees during 2014, from the current 6,700.The company said that the extra space at CFC2 "gives us confidence in our ability to manage the additional throughput of products and orders from Morrisons.com".The group had cash and cash equivalents of £110.5m at the period end, up from £89.6m the year before.As for this year, Ocado said that it expects to grow "broadly in line with, or slightly ahead of, the market"."While there appears to be a more positive outlook for broader economic growth in the UK, we believe this has yet to translate into sustained improvements in consumer spending and the broader consumer environment remains subdued," the company said.The stock fell sharply on Tuesday morning, down 4.2% to 501.5p in early trade.BC