Ocado’s 
share price boosted by 
talks with retailer

Ocado, which has a range that includes products supplied by upmarket grocer Waitrose, said gross sales rose 14.4 per cent to £185.5m in the 12-week quarter to February 24.

It said average orders per week rose 12 per cent to 130,995.

It added that he average size of each order edged up 2.2 per cent to £117.99.

After reporting the results, Ocado’s chief executive Tim Steiner said: “We maintained the momentum in sales growth and new customer acquisition with which we entered the year.

“Further improvements to the proposition to customers that we are making this year should enhance our appeal to shoppers and enable us to continue this momentum.”

Ocado also said it was in talks with Morrisons – Britain’s fourth largest grocer which plans to enter the online grocery market – to license some of its intellectual property and operating knowledge.

Founded in 2000 by three former Goldman Sachs bankers, Ocado has yet to make a profit at the pre-tax level, prompting analysts to question when the group will make money.

Analysts at Shore Capital said: “Specialist online grocer Ocado, which still largely distributes product procured by Waitrose, which is owned by the John Lewis Partnership, has revealed that it is exploring a licensing agreement with Wm Morrison Supermarkets with respect to a transfer of technology.

“This is an interesting development, noting as we do that both parties go out of their way to state that it does not involve a partial or whole interest in Morrison’s acquiring a stake in Ocado.”

Retail analyst Philip Dorgan, at Panmure, said: “Last year’s fund-raising, a heavy short position and vague bid rumours have lifted Ocado’s shares from their recent low of 60p.

“News of a potential joint venture with Morrisons might help economics, but tells us that Ocado will struggle to use its new capacity productively.

“We remain sellers, with a target price of 50p.”

Ocado’s shares closed up 23.69 per cent last night, a rise of 32.6p to 170p.