UK online food retailer Ocado’s third-quarter results have garnered a mixed reaction from analysts.

Ocado today (20 September) reported a slowdown in sales growth in the third quarter. The retailer booked a 9.9% increase in gross sales for the quarter to GBP162.6m (US$263.2m).

However, this marked a slowdown from the 12% sales growth the company posted for the first half of the year.

Shore Capital analyst Clive Black described the quarter as a “poor” one for the “struggling online grocer”.

“Ocado has reported far from inspiring Q3 data for its November 2012 year-end. A further decline in trading momentum has been recorded, which we see as very worrying.

“We have said it before and we say it again, we find the Ocado business model to be distinctly lacking compulsion, potentially flawed and is increasingly likely not to deliver any form of reward for investors on the upside anytime soon, if ever,” he said.

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Black cited competition from Waitrose, the emergence of click-and-collect, competition in online grocery and Ocado’s “very bespoke” fulfilment process as reasons for this.

“Following another poor update from a company we find vulnerable and detached from reality, Shore Capital continues to rate Ocado stock on our sell roster as we have since its flotation at 180p. For the record, we do not expect positive earnings in 2012/13F.”

Conlumino, on the other hand, said Ocado is “making very real positive strides”, putting it on a “stronger footing” to compete in what it says is becoming “an increasingly competitive UK food & grocery market”.

“Perhaps most pleasing is that Ocado managed to grow average order size, from GBP111.08 to GBP112.44 during this period, off the back of a falling emphasis on short term voucher activity,” said senior Conlumino analyst Joseph Robinson. “At the same time, it has actively looked to grow its private label offer, while its trial in Manchester of the Tesco price-matching Low Price Promise is set to be expanded. Such investments are strengthening Ocado’s value credentials, making it a more viable alternative among less affluent consumers.”

Robinson acknowledged Ocado will continue to operate against “prevailing negative economic headwinds” and in a sector which is “increasingly becoming characterised by even deeper and more regular promotional activity”. However, he said it will benefit from “the inevitable economies of scale” gained from its second distribution site, due to open in Warwickshire in 2013.

Ocado’s share price was down 1.8% to 66p at 14:14 BST today.