Shares in Ocado have slumped after its annual losses more than tripled and it warned that a step-up investment would hit its bottom line over the coming year.

The online retailer and technology firm fell by 13% on the results, which also showed expansion and higher wages for in-demand drivers adding to costs.

Its UK delivery business – a joint venture with Marks & Spencer – saw sales grow by 4.6% to £2.29bn and boss Tim Steiner said the past year showed “online grocery is here to stay”.

But it was a sharp slowdown on the 35% increase seen the previous year as the pandemic boosted shopping from home.

The latest results were also dragged back, over the second half of the year, by the impact of a fire at distribution centre in Erith, Kent, and labour shortages.

Growth is expected to recover to the “mid teens” in the current financial year, Ocado said.

Customer numbers rose 22% to 832,000 though the amount spent per basket fell 5.8% to £129.

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Mr Steiner played down the impact of a cost of living crunch saying Ocado’s prices had not been rising “anything near as much as I’ve been reading about in the newspapers” and that it was not expecting to see a reduction in demand.

In addition to its retail joint venture with M&S, Ocado provides an online platform for companies such as Morrisons in the UK, Kroger in the US and Casino in France.

The group as a whole saw revenues climb by 7.2% to £2.5bn for the year to 28 November.

But its bottom line was weighed down by increased costs and technology investments, resulting in its pre-tax losses increasing from £52m to £177m.

Ocado’s finance chief Stephen Dainith also revealed it was stepping up investments in automated warehouses around the world, with £30m more spending than analysts had been anticipating – resulting in a hit to expected earnings.

The shares fall added to declines seen over the past year as the boost provided by the pandemic in 2020 faded.

Commenting on the results, Russ Mould, investment director at AJ Bell, said: “Years into the future, Ocado could be sitting pretty, lapping up a healthy stream of cash from partners using its technology.

“But for now, it’s all about spending to help set up operations and to make its technology as efficient and clever as possible.

“Its capital expenditure represents a big chunk of revenue, and it is growing fast, unlike its sales.

“Investors are getting tired of hanging around for the big earnings breakthrough and its share price has more than halved over the past 12 months.”

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