Ocado sales rise in squeezed food market

Ocado, the online grocery business, has seen its sales rise amid the price-cutting war in the supermarket sector.

Ocado has thrived amid the backdrop of the supermarket price war. Picture: Contributed
Ocado has thrived amid the backdrop of the supermarket price war. Picture: Contributed

The group, which has a £170 million contract with Morrisons, yesterday unveiled a 15 per cent lift in gross retail sales to £252m in the 12 weeks to 9 August compared with a year ago.

However, Ocado said the value of its average basket declined 1.1 per cent to £110.46 compared to a year ago – its sixth consecutive quarterly fall.

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Tim Steiner, group chief executive, said: “We are pleased with the continued steady growth of our business in a retail environment that remains tough.”

Steiner added: “Notwithstanding the competitive nature of the marketplace, we expect to continue growing slightly ahead of the online grocery market.”

Ocado said earlier in the year that it expected to sign an international tie-up before the end of the year, but there was no announcement of a deal with the trading update.

There has also been speculation over the future of Ocado’s contract with Morrisons. David Potts, chief executive of Morrisons, deflected questions at the supermarket major’s results meeting last week, only saying that the joint venture with the online company had made a “good start”.

It was reported last month that US-based online shopping giant Amazon was planning to launch its Amazon Fresh food operation in the crowded UK grocery market in what would add to the competitive pressure on players such as Ocado.

Brokers at HSBC said that Amazon had a history of sustaining losses while it builds new operations. HSBC added: “Our view is that Ocado appears like the most vulnerable player, particularly if Amazon targets the lucrative, densely populated London market.”