“Clearly where the money markets are, and at the price that they want, there are not many takers,” said the executive, who asked not to be named. “The company offers a very good service, so it’s got the customer-facing part right, the whole idea is rational and it makes sense. The problem is it doesn’t make money.”
He added that Ocado had only one major distribution centre, at Hatfield, which was “a huge risk” in the event of a major incident. “If they have a strike or a fire, it is a very high-risk business for an investor,” he said.
His comments came as accounts filed at Companies House this week for the year to 2 December 2007 showed Ocado had made annual losses of £39.7m.
Ocado finance director Jason Gissing would not comment on the likelihood of a sale. But, he insisted, the company had moved into profit at an EBITDA level in the final weeks of 2007 and was expected to make a profit of between £1m and £2m in the current financial year, before interest and other one-off items. Supermarket executives who criticised Ocado simply did not understand the company, he added.
“Tetra Pak made losses for its first 14 or 15 years, and today is one of the world’s most successful private businesses,” he said. “People said the same thing about Vodafone and BSkyB 10 years ago. They were perennial loss-makers that had got the customer-facing bit right. The internet is changing the way we live. And only one company in the world can build warehouses and deliver world-class service selling groceries to customers’ homes. That’s Ocado.”
Ocado has reportedly raised more money, £277m of equity, than any other start-up in Europe since its inception. Jorn Rausing, the Tetra-Pak billionaire, invested £15m in the retailer in 2003. Gissing hinted in July that the business would be put up for sale at some point.