Supermarket competition dents Ocado

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Online grocer Ocado reported slightly slower sales growth in its last quarter and said orders are getting smaller as competition heats up in the supermarket sector.

The firm, which delivers Morrisons’ produce in a joint venture between the two grocers, said its gross retail sales rose 15 per cent to £311.4m in the 16 weeks to November 30, its fiscal fourth quarter.

This was down slightly on a 15.5 per cent rise in the third quarter.

Average order size fell 1.7 per cent to £109.74 as more people top up their shopping in convenience stores rather than rely on a weekly online order.

Ocado, whose range includes products supplied by upmarket grocer Waitrose, has not made an annual pre-tax profit since it was founded in 2000, but analysts are forecasting one for its year just ended, the 2013-14 financial year.

The group’s chief Executive Tim Steiner said: “We are pleased with the continued steady growth in our business against the backdrop of a more competitive grocery market.

“Although we anticipate the retail environment to remain challenging, we expect to continue growing sales slightly ahead of the online grocery market.”

Shares in Ocado, down 24 per cent so far this year, closed on Wednesday at 334p, valuing the business at £1.95bn.