Hatfield’s Ocado set for stock market float
AN online grocer looks set to go public this summer – in a �1bn stock market flotation.
Hatfield-based Ocado announced this week its total sales for 2009 had increased by 25 per cent to �427.3m, and had cut its operating losses by 33 per cent to just �14.4m.
The news increases the likelihood that Ocado will make an Initial Public Offering (IPO) later this year.
The company has appointed two new non-executive directors – former chief financial officer of Reuters, David Grigson, and ex-KPMG vice-chairman Ruth Anderson.
The appointment of two business heavyweights will undoubtedly strengthen Ocado’s board – essential for any company preparing to float.
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Ocado chief executive Tim Steiner said: “David Grigson and Ruth Anderson bring the experience of working with a range of larger organisations that will be invaluable to Ocado.”
Ocado began trading in 2002 and now serves more than 13.5 million households across the country.
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Uniquely, it handles customers’ orders from an �80m, 23-acre distribution centre in Hatfield Business Park, which is operated using software that was designed by Ocado itself.
The centre allows Ocado to manage stock and cut food waste, giving Ocado a near perfect record for order fulfilment, and because it is a delivery service only, provides customers with a greener alternative to going to the supermarket.
But the use of a single distribution centre is not without its problems. Because the technology used at the centre is unique, it has meant a significant investment from Ocado, which has contributed to the company never recording an end of year profit in its eight years of trading.
And the single distribution centre means Ocado does not currently deliver past Yorkshire.
Ideally, the company could do with a second distribution centre in the north of England – which could be paid for by a successful float on the stock market.
Ocado’s chief financial officer Andrew Bracey said: “As Ocado grows it is essential that we maintain and improve our operational efficiency.”