Ocado share price dives on half-year results
Online grocer Ocado has seen its share price drop 4.7 per cent after releasing half-year results for the 24 weeks ended 18 May.
The fall comes as the company announced it was on track for its first ever annual pre-tax profit. The company swung back into the black with pre-tax profits reaching £7.5m compared to a £1m loss in 2013.
Although the company's share price has fallen 16 per cent over the last six months, it is still up 24 per cent over the last year.
It has benefitted from successfull launch of Morrisons.com in January, paving the way for future for future agreements so commercialise the company's intellectual property.
Investment in IT will continue so as to take advantage of the burgeoning online grocery market.
Ocado conceded that price competition had been on the rise, led primarily by the big supermarkets, it said "significant progress in operating efficiency and the development of our product offer meant that EBITDA was up almost 80 per cent in the period".
The company also confirmed the long-awaited third warehouse for grocery deliveries, which will be located in Andover, Hampshire. The new warehouse is set to open at the end of 2015 and is expected to cost £30m during 2014.
The new facility will be smaller than the two existing customer fulfillment centers and will be used solely by Ocado.
Ocado's specialist online pet store, Fetch, saw some success, while the company's own label range enjoyed a rise of over 50 per cent.
Following the results, Mike Stewart of Shore Capital Stockbrokers, said: "we are not inclines to adjust our full year financial expectations for Ocado. The business provides a good service but is not a proprietary retailer of any substance to our minds as it depends upon Waitrose and Morrison's".