[caption id="attachment_70831" align="aligncenter" width="640"] FY17 was 53 weeks
*Before results from joint venture and exceptional items.
Source: Company reports/Coresight Research[/caption]   FY18 Results Ocado reported its FY18 results for the 52 weeks ended December 2, 2018. Unless specified, growth figures below compare the 52-week FY18 to the 53-week FY17.

• Net sales were up 9.9% year over year to £1.60 billion, driven by increases in the average number of orders per week and fees earned from the partnerships. However, the company missed the consensus of £1.62 billion.
• On a 52-week basis, total revenues were up 12.3% year over year, while the company grew retail revenues 12% year over year, and solutions revenues by 15.8% year over year.
• Gross margin expanded 21 basis points to 34.2%.
• Operating margin contracted 235 basis points, due to higher distribution and administrative costs. Customer fulfillment center (CFC) costs grew 17.8% year over year, while trunking and delivery costs grew 8.5%.
• Non-GAAP EBITDA decreased 22.4% year over year to £59.5 million, below the consensus estimate of £73.8 million. Management attributed the decline in EBITDA to increased resources devoted to further develop its technology platform, the opening of a new CFC, and increased technology headcount to support ongoing development.
• The company reported a loss per share of 6.87 pence, compared to loss per share of 1.39 pence in the previous year and below the consensus estimate of a 3.8 pence loss per share by StreetAccount.
• Cash fees from solutions partners in 2018 were £200.1 million, compared with £146.1 million in 2017.
• The company grew its active customers 11.8% year over year to 721,000.
• Total order volume increased 12.1% to an average of 296,000 orders per week.
• Ocado saw a slight decline in its average basket value, to £106.85 in FY18, from £107.28 in 2017, on the back of an increase in the average price per item offset by a decrease in the average basket size.

Increase in Partners The company said in 2018 it signed international partnerships with Sobeys, ICA and Kroger to develop the Ocado Smart Platform in Canada, Sweden and the U.S. respectively. Management said that its partnerships are making “good progress.” Bon Preu launched its online offer in Catalonia in November; Groupe Casino continues building its first CFC in the south of Paris; Sobeys has also started building its first CFC site in the greater Toronto area; and Kroger has planned its first three CFCs out of a total of 20 CFCs within three years. In the U.K., Ocado has started to fulfill customer orders for Morrisons from its new facility at Erith. Capacity Expansion Ocado is adding new capacity to its network: it opened its fourth CFC in Erith, south London, with a capacity of £1.2 billion in sales, making it the largest automated grocery fulfillment center in the world. The company ramped up its capacity at Erith and is processing over 30,000 orders per week. It plans to open 23 new CFCs for solutions partners in the coming years. Tim Steiner, CEO of Ocado, said: Our performance last year was the result of many years of focus, dedication and perseverance: what we have called our “18-year overnight success”’ …. We now have in place a platform for significant and sustainable long-term value creation as the leading pure-play digital grocer in the U.K., a world-leading provider of end-to-end ecommerce grocery solutions, and as an innovative and creative technology company applying our proprietary knowledge to a range of challenges. Our transformation journey is well under way with increased cash fees earned and greater investment as we execute on behalf of our partners. Creating future value now will involve us continuing to scale the business, enhancing our platform, enabling our U.K. retail business to take advantage of all its opportunities for growth, and innovating for the future. Outlook For FY19, Ocado expects:

• Retail revenue for fiscal 2019 to increase in the range of 10%–15%, as it ramps up its fulfillment capacity. It expects to grow market share in the U.K.
• Retail EBITDA to grow further, led by increased capacity utilization at new CFCs.
• EBITDA to decline in the solutions segment, due to an additional £15–£20 million in CFC build cost.
• Capital expenditure of £350 million in fiscal 2019, with additional capital directed towards its solutions business.
• In FY19, according to consensus estimates recorded by StreetAccount, analysts expect Ocado to report revenues of £1.83 billion, up 14.5% year over year, and a loss per share of 1.8 pence.