Ocado’s sales rise as rivals sharpen up

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Online grocer Ocado unveiled improved sales growth yesterday against a backdrop of more aggressive competition from Britain’s biggest supermarkets.

The group, which delivers Waitrose and its own products to much of the UK, said that year-on-year sales growth will be around 13 per cent for the 12 weeks to May 13, compared with 10.9 per cent in the previous quarter.

The group said its Hatfield, Hertfordshire distribution centre is now operating at “record levels” of capacity after work last year to expand the site hit deliveries.

The construction of its second distribution centre at Dordon, in Warwickshire, is progressing according to plan, Ocado said, and is set to open in the first quarter of 2013.

Philip Dorgan, analyst at Panmure Gordon, said second quarter sales growth had beaten his expectations and gave “credit where credit is due” but warned the group is still losing market share.

Sainsbury’s online food operation is growing at 20 per cent, Tesco at about 12 per cent and Waitrose recently announced that its online business grew by 26 per cent over the last 15 weeks with online food up 42 per cent last week, Mr Dorgan said.

He went on: “This means that Ocado is losing market share. Why is this? We think that it is because its competitors have sharpened up their act, delivery windows are narrowing, product quality is improving and substitutions are decreasing, or getting better.”

Ocado was founded in 2000 by Tim Steiner, Jason Gissing and Jonathan Faiman, and now deals with an average 18,000 orders a day.