Ocado confident of delivering sales growth

Online grocery delivery firm Ocado yesterday said its operational problems were largely behind it as it looks to focus on driving sales growth this year.

The retailer, which delivers Waitrose and its own products to much of the UK, is looking to bounce back from a loss of £2.4 million in 2011 after it struggled with capacity constraints at its Hatfield distribution centre.

It said better levels of capacity at Hatfield led to an 11 per cent rise in gross sales to £162.1m for the 12 weeks to 19 February. The size of the average order was slightly smaller but the average number of orders per week grew by 13.4 per cent.

Chief executive Tim Steiner said: “Evidence suggests we have largely overcome the operational challenges we faced in expanding our Hatfield capacity in the second half of 2011, and are set to meet growing demand through the rest of the year.”

He said Ocado expects to see an acceleration in sales growth as the year progresses.

Analysts remained unconvinced. Philip Dorgan at Panmure Gordon retained his “sell” rating on the shares and said Ocado will continue to struggle to make money.

He added: “We expect that the competitive environment will get tougher and that Ocado will struggle to demonstrate operational leverage.”