Ocado Group Plc (OCDO), the U.K.’s largest online grocer, reported modest growth in first-half profit as it joined a coupon battle with store-based competitors and said the outlook remains tough for food retailers and the economy.
Pretax profit was 181,000 pounds ($282,180) in the 24 weeks ended May 13, the Hatfield, England-based retailer said today in a statement, compared with 174,000 pounds in the same period a year earlier. Earnings before interest, tax, depreciation and amortization rose 4.5 percent to 14.9 million pounds, missing the 15.1 million-pound average estimate of three analysts.
Ocado fell as much as 12 percent in London trading, the most since Dec. 19. The retailer increased spending on marketing coupons to defend against similar activity by the biggest supermarkets including Tesco Plc (TSCO) and J Sainsbury Plc. Revenue at the online grocer rose by 11 percent to 308 million pounds, and Ocado said it expects growth to accelerate in the second half as it increases capacity at its Hatfield distribution center.
“The grocery market and the general economic picture remain challenging and uncertain,” Chief Executive Officer Tim Steiner said in the statement. “The third quarter is particularly hard to forecast as we have already seen some disruption from the Jubilee events, and there is uncertainty as to the effect of the forthcoming Olympic Games.”
Ocado dropped 7.7 percent to 99.8 pence as of 8:21 a.m. The shares have still risen 83 percent this year, the fifth-best performer in the U.K. FTSE 350 Index.
Duncan Tatton-Brown, the former chief financial officer of Fitness First Group Plc, will join the board as new CFO from Sept. 1 replacing Andrew Bracey who left in March. Tatton-Brown was formerly finance director of Kingfisher Plc.
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