Ocado sales surge in third quarter despite 'competitive' market

The online grocer reported retail sales up 15.5% in the 12 weeks to August 10. It revealed it is taking 163,000 average orders per week, up 17.4% on the same quarter last year. Average order size has edged up 1.7% to £111.64.

Ocado said that as of the end of the period it had cash and cash equivalents of £78m and external borrowings of £44.9m.

Ocado chief executive Tim Steiner said: “We are pleased with the continued steady growth in our business despite the increasingly competitive nature of the market. We remain committed to continually improving the quality of the offer to customers, which we believe will support continued growth. This performance also further demonstrates the ongoing shift to online grocery shopping.

“The retail environment is challenging with an increased level of promotional activity and price reductions across the industry. However, due to the strength of our offer, we expect to continue growing sales broadly in line with, or slightly ahead of, the online grocery market.”

Ocado chief financial officer Duncan Tatton-Brown said: “It’s not an easy market, there’s a fair amount of pricing activity. We have been impacted by the price activity and expect to continue to be.”

However he added that Ocado has the largest range of any supermarket and as such sells products shoppers cannot get anywhere else, meaning those products remain protected from the promotional activity of rivals.

In the period Ocado launched its specialist kitchen and dining shop, Sizzle, last month. And the developmet of its logistics solution, replatforming and enhancements to its technology are “progressing well”.  

It added that its partnership to provide Morrisons’ online platform is growing with customer demand.

Ocado is introducing a click-and-collect service at four London Underground stations in Ealing, Ruislip, Eastcote and Woodford from September 15.

Tatton-Brown said: “It’s just a trial for us to test customer reaction. We don’t have a strong view one way or another about whether we’ll roll it out.”