UK: Ocado sales growth fails to convince analysts
Ocado has posted sales growth of 18% for the first quarter of 2014
UK online specialist Ocado today (12 March) reported a jump in first-quarter sales but the result failed to convince the City and its shares tumbled.
Ocado reported a 22.6% rise in gross sales to GBP227.5m for the period ended 23 February.
Average orders per week also grew 18.4% to 155,152, although the average order size fell slightly by 0.4%.
CEO Tim Steiner said he was "pleased with the continued growth of the business".
He added: "While we are encouraged by our current trading, the retail environment remains both challenging and competitive, and we expect to continue growing in line with, or slightly ahead of, the market."
However, Shore Capital analysts Clive Black was uncertain about the outlook for Ocado. Hitting out at its business model, Black pointed to the "total failure to generate profits" and suggested partners Waitrose and Morrisons could end their agreements with Ocado in the future.
"We remain convinced that this model will not work and that in time there is a greater likelihood than not that both Waitrose and Morrisons will walk away from Ocado in our view," Black said.
He added Ocado could see margins come under pressure as Tesco sharpens its prices. Ocado matches the prices Tesco charges for brands, excluding promotions.
Shares in Ocado were down 5.33% at 541.5p at 12:40 GMT.
During the review period, Waitrose Ltd experimented with various new trends in grocery retailing including internet retailing and convenience-oriented proximity retailing. Both of these strategies hav...
The American Muffin Co. started producing gluten-free products in 2005 and - while this is still the baker's biggest selling line - the firm has extended its range to encompass other areas in the free...
The UK online grocery sector is highly innovative and disruptive - and it provides a template to the rest of the world....
Three concepts are currently shaping trends in grocery retailing in the UK: convenience stores; discounters; and online sales....
We have identified 5 issues that will be crucial to the convenience store format in 2020....
- On the move: What's in store from Tesco's new CEO?
- On the money: Steady as she goes at Cloetta
- Focus: Lindt plays safe with Russell Stover buy
- Interview: Bell hits out at German cartel ruling
- Comment: ConAgra failing to address core issues
- Campbell issues warning on 2014/15 fiscal year
- UPDATE: Premier establishes international unit
- Premier launches Oxo pots range in UK
- Genius secures listings in French supermarkets
- Universal Robina to buy biscuit firm Griffin's