* CEO says firm will make "hundreds of millions of pounds"
* FY statutory pretax loss narrows to 600,000 pounds
* EBITDA 33.5 mln stg, up 20.4 pct, in line with forecasts
* Second major distribution centre to open this month
* Shares up 14 pct
(Adds detail, CEO, analyst comment, shares)
By James Davey
LONDON, Feb 7 Loss-making British online grocer
Ocado said the patience of its investors would be
richly rewarded as it kept them waiting another year for its
first pretax profit.
"Our shareholders understand the business, (and) are very
supportive," chief executive Tim Steiner told Reuters.
"They're in it to become a multi-billion dollar player, that
will make hundreds of millions of pounds of profit at one point
in time and that requires investment," he said.
Shares in Ocado rose 14 percent on Thursday amid hopes its
new distribution centre - which will open on schedule and on
budget by the end of this month - will finally propel the
business into the black.
Ocado, which has not made a profit since it was founded in
2000 by three former Goldman Sachs bankers, has polarised
Fans point to rapid growth in online grocery sales, its
state-of-the-art distribution centre and high service ratings.
Sceptics, however, doubt its model of filling orders from
central depots can be as profitable as online operations at
grocers like market leader Tesco and No. 3 J Sainsbury
, which largely pick orders in stores.
Ocado, whose range includes products supplied by upmarket
grocer Waitrose, reckons its new 200-million-pound ($313
million) depot will eliminate capacity constraints and increase
"Turning on the new facility is the first time in our
history we've had operational capacity headroom to grow at a
significant pace," said Steiner.
Numis analyst Andrew Wade agreed the new warehouse would
allow Ocado to accelerate sales growth and "deliver on its
potential" as Britons increasingly embrace online shopping.
A LONG WAY TO GO
Many of Britain's grocers are finding the going tough,
despite their focus on essential goods, as consumers have been
hit by below-inflation wage growth and austerity measures.
The online food market, in contrast, is growing at a rate of
15-20 percent a year.
Yet Ocado has a long way to go meet its ambitions.
Earnings before interest, tax, depreciation and amortisation
(EBITDA) rose 20.4 percent to 33.5 million pounds in the 52
weeks ended Nov. 25 - in line with analysts' expectations.
Its statutory pretax loss narrowed to 600,000 pounds from
2.4 million pounds the year before.
And while its shares were up 14 pence at 118.4 pence by 1450
GMT, valuing the business at about 684 million pounds, they are
still way below the 180 pence at which they floated in 2010.
Ocado, which last month recruited former Marks & Spencer
boss Stuart Rose to be its next chairman, is regularly
touted as a possible bid target for M&S as well as Wm Morrison
, as neither has a significant online grocery business.
Steiner, however, dismissed this speculation.
"The reality is that every time our stock rises because
there actually are buyers who believe in the concept, those who
don't like the concept can only believe that it must be bid
speculation," he said, adding: "I don't think we've ever had any
real bid speculation."
But some analysts do see the firm as a possible target.
"We think that the debate now moves on to whether its assets
are attractive to either M&S or Morrisons and, if so, at what
price," said Panmure Gordon analyst Philip Dorgan, a long time
critic of Ocado.
($1 = 0.6389 British pounds)
(Editing by Rosalba O'Brien and Mark Potter)