Online grocer Ocado (OCDO.L) saw its revenue rise last year as it continued to benefit from the boom in online shopping, but its losses more than tripled as investments in five new robotic warehouses weighed on earnings.

Ocado’s annual losses rose to £176.9 million ($239.7 million) last year, even as sales rose 7.2 percent to £2.5 billion.

Customer numbers increased by 22.4% to 832,000, and orders increased by 11.9% to 357,000, although the amount spent per basket fell by 5.8% to £129.

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While order growth was positive, it was held back in the second half of the year by the ongoing tight labor market as the online grocer struggled to find enough staff to keep up with demand.

Due to the driver shortage, the number of customer orders delivered per van decreased from 184 in the peak year of 2020 to 177 last year.

The introduction of five new robotic warehouses for retail partners and investment in new technology weighed on the group’s overall profit, with pre-tax losses widening from £52.3 million to £176.9 million in the 12 months to 28 November.

CEO and co-founder Tim Steiner said: “The past year has shown once again that demand for online grocery stores remains.

“In most mature markets, the Internet is the fastest growing sales channel. To be truly successful here, grocers must offer the best offering with the best economics for all customer needs.”

He added that the group’s investment in a new generation of robots will further increase capacity and performance.

Ocado shares fell 12% to 1,235 pence in London on Tuesday morning.

Chris Beckett, head of equity research at Quilter, said: “Ocado’s 2022 forecast includes higher costs to support long-term growth and higher capital expenditure, which will more than halve its cash balance of £1.5 billion.”

“Ultimately, this is a growth stock that needs new orders to justify the valuation. These will likely come, but the timing remains uncertain.”

Two weeks ago, Ocado unveiled a series of innovations, including a faster, cheaper and lighter robotic arm and improvements to its automated shipping system that could help reduce labor costs by 40% in the long term.

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This investment in automated technology also means that 50% of customer orders can be delivered within four hours, compared to 10%

“Partners can go live faster and at a lower cost, achieving higher margins and returns on investment. For Ocado Group, this means a larger target market, the ability to onboard new partners faster and new opportunities to accelerate growth,” said Steiner.

The story continues

Last year, Ocado opened five new distribution centers worldwide, including two in the US for the first time. Three more have been added since the end of November, and a total of nine new ones are scheduled to open this year – including six in the US.

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