Ocado posts £2.4m loss for 2011

The firm remains confident about its business as an online food retailer

Online grocer, Ocado, posted a pre-tax loss of £2.4m for the year to the end of November 2011.

The loss was expected by the firm and is still an 80% improvement on the previous year, when the firm reported a pre-tax loss of £12.2m.

Ocado has pointed to sales growth of 16% as evidence that it is moving towards profitability.

The firm was set up in 2001 but floated in July 2010. It is posting its second set of results.

"With a sales increase of 16.6% in 2011, we are confident that Ocado grew faster than other players in the sector," said chief financial officer Andrew Bracey.

Analyst reaction has been cautiously positive.

"Ocado's sales rose encouragingly and profitability improved," said Dennis Reid at Retail Performance Specialists.

"However, there remain significant medium and longer term issues of distribution capacity, related investment and overall funding requirements for a costly business model, supplier contracts, growing competition and pre-tax profitability prospects."

Shares in Ocado rose 4% in London after the results were published on Tuesday.

Despite the loss, the firm remains confident about its business as an online food retailer.

"Against the backdrop of a weak UK economy, we have continued to see the development of the online grocery retail market," said chief executive Tim Steiner in a statement.

"We believe this growth is evidence of a structural shift in consumer behaviour and we will continue to see an expansion of the online grocery retail market," he added.