UK: Sales growth slows at Ocado in Q3
Ocado was optimistic about the fourth quarter forecasting that its rate of sales growth would increase
UK online food retailer Ocado has reported a slowdown in sales growth in the third quarter.
The retailer today (20 September) reported a 9.9% increase in gross sales for the quarter to GBP162.6m (US$263.2m).
However, this marks a slowdown from the 12% sales growth the company posted for the first half of the year. The company has already hinted that the major events taking place in the UK this summer, notably the Diamond Jubilee celebrations and the Olympics, have been disruptive.
The company was optimistic about the fourth quarter forecasting that its rate of sales growth would increase but Ocado said it did not expect consumer pressure and volatility to ease in the immediate future.
"The grocery market and the general economic picture remain challenging, with consumer confidence subdued and significant competitive couponing activity," said CEO Tim Steiner. "Notwithstanding this environment, we have continued to build on the foundations we have put in place to deliver growth and operational improvement through the rest of this year and for the future, and we are targeting an increase in sales growth through the remainder of the period."
Year-to-date gross sales growth to the end of the third quarter stood at 11.3%, Ocado stated.
The company reported that average orders per week had increased by 8.6% to 120,494 for the 12 weeks to 5 August 2012, while average order size reached GBP112.44, against GBP111.08 in the corresponding period last year.
Ocado said it had been able to preserve margins during the quarter by placing less emphasis on short-term vouchering activity and had been able to maintain "excellent customer service" during the Jublilee and Olympics periods as a result of the forward planning and IT solutions it had undertaken in preparation.
Ocado's Christmas sales rise has brought some cheer to investors, but analysts say the retailer's path to sustainable profit remains riddled with risks....
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