Time for the Ocado Robots to Deliver the Goods

Investors have their first snapshot of what Ocado Group Plc’s trading looks like in exceptionally favorable trading conditions for its online supermarket business.

Its core customer-facing retail business, now a joint venture with Marks & Spencer Group Plc, lifted sales by 27% in the six months to May 31. The frantic buying of groceries driven by the pandemic began about halfway through the period, and so isn’t fully reflected in the numbers. Sales were running about 40% up going into the second half of the financial year.

Ocado has always argued that its model, which generates economies of scale as orders are fulfilled in its huge robotic warehouses, is more profitable than supermarket employees plucking flour and toilet paper from shelves. The evidence supports that, with Ebitda (a measure of profit) in retail almost doubling to 46 million pounds ($58 million). But Ocado’s shortage of capacity prevented it from fully capturing demand, which was worth five times more in terms of revenue at the peak of the crisis.