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Ocado to open second distribution centre

Hatfield: UK: Ocado, the online grocer, is to open a second distribution centre, in Warwickshire to support its current distribution centre in Hertfordshire.

Ocado said it achieved gross sales growth of 11.4% last year, accelerating to 14.2% in the six weeks to 6 January 2013. However, it said the company’s ability to grow faster will be limited until the second distribution centre opens. Ocado made the same reference to growth limitations in last-year’s annual results, when the loss of £2.4m was also an improvement on the 2010 loss of £12.2m. Nonetheless, Ocado said, it was well positioned to capitalise on a growing trend of shoppers carrying out their grocery purchases online.

“Against a tough economic environment, we continue to see that shopping online for groceries is of increasing importance for consumers, evidenced by the online growth figures reported across the grocery industry,” it said.
“As more and more shoppers leave physical stores to shop for their weekly groceries from the comfort of their own homes, we have seen our competitors investing more into the online channel.”

Ocado gave a new year fillip to shareholders last month when it announced that Sir Stuart Rose, the former chief executive of Marks & Spencer, would take over from Lord Grade as chairman in May. Rose said retail’s “fundamental shift” onto the internet would confirm Ocado as a “powerful online player”.

Ocado is entering a critical year as it opens a second distribution centre to compete against rivals, such as Tesco, that are also investing heavily in web operations. In full-year results published on Thursday, Ocado said its pre-tax loss fell from £2.4m in 2011 to £0.6m, on sales of £732m. The retailer that sells largely Waitrose goods has yet to turn a profit since floating at 180p a share in 2010 and it has struggled to win over investors, with its shares currently trading at just over 100p.