A bad press can get you down. So let's hope Ocado chief executive Tim Steiner and his band of bankers-turned-grocers are selective in their reading. Depending on their choice of newspaper, this online food retailer run in partnership with Waitrose is either a spectacular success or a spectacular failure.

Somewhere in-between there is the truth and, according to Steiner, it is the naysayers, who include Tesco boss Sir Terry Leahy, who are misguided. "Sir Terry claims we have an unviable business model," Steiner told a conference this week. "Why he feels he has to comment on us, a £300m turnover company, I'm not sure. Maybe we are getting to him. We are the only business out there taking market share from Tesco and have done so for five years. Indeed, we are bigger than Tesco within the M25."

Bullish talk. But on paper the financials don't look so good. Since being established in 2001 Ocado has yet to turn a profit.

Its latest figures published this week for the 53 weeks to 3 December 2006 reveal a pre-tax loss of £43m, a marginal improvement on the previous year when its pre-tax loss was £45.5m.

And that's on top of years of confusing messages coming out of Hatfield headquarters regarding its profitability. In January 2006 chief financial officer Jason Gissing said Ocado had reached operating profit in the last quarter of 2005. He clarified this by saying this did not cover marketing or head office costs at the time but would do during 2006. Yet the figures show that in 2006 Ocado made an operating loss of £37.5m compared with £38m for the previous year.

This has led to some observers predicting that Ocado will go the same way as failed US online retailers Webvan and Peapod, which had similar specialist business models.

And a note in the accounts from PricewaterhouseCoopers questioning Ocado's future viability is seen by many as a further bad omen. Steiner shrugs this off, claiming the auditors were obliged to include the note as some of the covenants on loans will come up in the next year. He insists that even if the banks demand their money back, Ocado will be able to secure further funds.

So much for the prosecution. What about the case for the defence? Well, Ocado has not found getting financial backing for Ocado a problem so far.

The period covered in the results is almost a year ago, says Steiner, who insists the company is closer to breaking even, and beyond that, reaching EBITDA profitability, expected during the next quarter. "Our sales are up to £300m," he says. "By the end of this financial year, in eight weeks time, we will have EBITDA of negative £6m-£7m and double-digit millions of profit next year."

Steiner puts the current position down to the huge investments made to deliver an unparalleled service - rather than rushing to make money - by processing orders from just one central site.

And JLP seems happy with its investment. This week Waitrose chief executive Mark Price told The Grocer the partnership was still an important outlet for its brand and products.

"I would stand behind the comments of Tim Steiner," says Price. "The business will be EBITDA-positive in the run up to Christmas and profitable in the near future."

However, one corporate finance expert suggests JLP is no longer so enamoured with Ocado. "JLP did not invest in the past two share issues by Ocado," he cautions, adding that it is hard to get excited by a company in which the sales it makes are not much more than the capital that has been invested. "I think it has long-term strategic challenges. It clearly costs a great deal to do this well and Ocado's service does seem very good. But will it be able to expand much beyond the south east? There is also a great deal of competition. Tesco's online sales have hit £1.5bn and Sainsbury's and Asda are in there too. But Ocado is not a brand, it is just a route to market. So what happens if the relationship with Waitrose changes?"

Steiner freely admits Ocado has made mistakes in the beginning, paying huge salaries for big name directors such as Roger Whiteside, who left after the first year, as well as various issues with IT and service providers, which are now largely in-house.

Yet he is convinced the company's focus on customer service is the correct approach, and that there is a £1.5bn sales opportunity out there for Ocado as more consumers switch to buying groceries online.

As the ad goes, if there's "one more thing to say, type 0-c-a-d-0 dotcom and try us out today".n

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