Online grocer Ocado saw shares slump after warning over a “sustained” hit from the sector’s fierce price war and said there was no sign of a let-up.
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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”.
‘As the market remains very competitive, we are seeing sustained and continuing margin pressure and there is nothing to suggest that this will change in the short term, ‘ Mr Steiner said.
Steiner said the increase in orders was Ocado’s best volume increase in more than five years.
The firm, whose range includes products supplied by upmarket supermarket Waitrose, said gross retail sales were 286.4 million pounds in the 12 weeks to August 7, its fiscal third quarter, up from 252 million pounds in the same period previous year. This includes income from its partnership with Morrisons [IRDX RMOR] that sees it supply both fulfilment and technology services that underpin Morrisons.com.
Ocado’s retail sales also increased, up 13.6 per cent to £286.4m, as compared to £252m for the same period past year.
However, the average order size dipped by 3.4 per cent.
While Ocado did warn about the squeeze on margins that the price war is causing, it had some positive news, announcing in its trading update that the average number of orders placed by customers increased by 19% year-on-year to 226,000 per week in the last quarter.
Tim Steiner, Ocado’s chief executive.
But he said he still expected Ocado to grow ahead of the online grocery market, and substantially ahead of the market overall.
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Catherine Shuttleworth, CEO at Savvy, said: “Very positive news from Ocado this morning, demonstrating more and more shoppers are happy to move to an online-only proposition”. Additionally its smart approach to continued service enhancement and improvements in product mix confirm the retailer’s position a real force to be reckoned with.
