Ocado ups efficiency on the road and in the shed

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Ocado has reported efficiency improvements in both distribution centre operations and deliveries in the first half.

Efficiency at the customer fulfilment centre (CFC) rose from 114 units per hour in the first half of 2012 to 132 per hour this year. And average deliveries per van per week rose from 150 to 158.

Gross sales rose 15.2 per cent to £383m. Average orders per week was up 13.4 per cent to 139,000 while average basket size rose 1.6 per cent to £115.

As a result trunking and delivery fell as a percentage of revenue from 12.2 per cent to 11.5 per cent. CFC operating costs showed a slight fall from 8.8 per cent of revenue to 8.7 per cent.

Despite the growth in sales, operating profit was down from £2m in the first half of 2012 to £1.7m this year. As a result, it made a pre-tax loss of £3.8m for the half, compared to a profit of £200,000 in the first half last year.

Ocado recently signed a deal with Morrisons on operation of the new CFC at Dordon in the Midlands.

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Tim Steiner

Tim Steiner, Ocado’s chief executive said the deal would enable greater investment in research and development, improve Ocado’s economic model with sharing of costs and faster utilisation of fulfilment capacity, and strengthen its balance sheet.

There has been speculation over what the deal will mean for Ocado’s relationship with Waitrose. Steiner said: “Ocado’s rights and obligations to source products (including Waitrose own-label products) from Waitrose remain unaffected by the arrangements.”

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