Ocado Reports Strong Rise In Sales Despite “Very Competitive” Market

Still, Ocado reported higher sales and orders per week in the 12 weeks to August 7, with group gross sales rising 15.4% to £314mln.

Average orders leapt nearly 19% higher to 226,000 a week, but in a sign of the toll taken by the ongoing price war, it revealed that average orders were 3.4% lower at £107.94. This included retail sales of £286.4m, from £252.0m.

LONDON-Ocado Group PLC (OCDO.LN) shares dropped sharply on Tuesday after the company said intense competition in the grocery market is putting pressure on its profit margin and warned that there is nothing to suggest that this will change in the short term.

“However Ocado’s combination of choice, competitive pricing, and industry-leading service has contributed to an increase in average orders by almost 19%, our best volume performance in more than five years”.

Mr Tatton-Brown refused to be drawn on the threat from Amazon, which recently doubled its reach to 128 United Kingdom postcodes, other than to say “we had our greatest quarter during the period they launched, so we must be doing something right”.

Numis, one of the company’s own advisers, was one of several brokers to cut full-year profit forecasts after the trading statement, reducing its full-year ebitda forecast…

Independent analyst Nick Bubb said that Steiner’s comments on margin would drive headlines and brought up another source of pain for management.

George Salmon, equity analyst at Hargreaves Lansdown, said: “There aren’t many retailers who can turn a blind eye to Amazon turning up in their back yard, and Ocado is no exception”.

The online retailer’s chief financial officer Duncan Tatton-Brown pointed out that Ocado achieved these record figures despite the fact that Amazon had launched its AmazonFresh grocery delivery service during this quarter.

Ocado’s shares have been under substantial pressure over the past year or so, falling from more than £4.50 per share in June 2015, to less than £3 now.