Try the new FT.com

April 8, 2007 10:01 pm

Ocado defies its losses to raise £30m

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

Ocado has raised more money than any other internet start-up in Europe, after the grocery e-tailer this month garnered another £30m from investors, despite having never made any profit since its inception in 2000.

The internet grocer, which delivers Waitrose goods to more than 50,000 households mainly in London and the south-east every week, has raised more than £350m in equity, with investors seemingly unfazed it is still making losses after seven years.

Pre-tax losses are thought to be about £40m in the year to November 2006, against a £45.5m loss in 2005. But investors expect Ocado to make an operating profit this year. Sales are growing at 35 per cent a year, and are running at £300m.

Jason Gissing, a founder and finance director, said the e-tailer was proving the sceptics wrong. At the time of its launch most retail watchers dismissed the warehouse-based model of grocery shopping, pointing to the collapses of Webvan and Peapod, both US operations, in 2001.

“People wrote us off,” said Mr Gissing. “But we have focused on building the business and trying to get to profitability.”

Ocado, which last year hired Michael Grade as its chairman, says that growth in volumes will eventually offset its high fixed costs – running at £25m a year. Ocado has invested in a fleet of vans and an extra warehouse.

The internet retailer, which in 2005 appointed Goldman Sachs as its financial advisers to raise more funds ahead of a possible flotation, is worth £570m. Ocado has raised £125m in three funding rounds since August 2005.

But it keeps pushing back its timeline for flotation. John Lewis Partnership, a founding investor and 28 per cent shareholder, insists that Ocado show a “good profit record” before floating.

Ocado, founded by three former Goldman Sachs investment bankers, has four more key investors – UBS and Goldman Sachs, Jon Rausing, the TetraPak billionaire and Nick Roditi, a hedge fund manager. The founders hold 22 per cent.

Copyright The Financial Times Limited 2017. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments
SHARE THIS QUOTE