Gross sales for online grocer Ocado have increased 19.5 per cent in the year-to-date but this growth slowed somewhat in the last quarter, an interim management statement revealed today.
In the 12 weeks to August 7th 2011, trading grew 16.9 per cent compared to the same period last year totalling £147.9 million, whilst gross sales for the 36 weeks of the retailer’s financial year-to-date have reached £444.6 million.
Despite trading broadly being in line with expectations, EBITDA expectations for the firm may well be cut, with the consumer market proving tougher than anyone anticipated at the time of its floatation on the stock exchange last July.
Tim Steiner, CEO of Ocado, said: “In spite of the tough economic environment, our sales are growing substantially and we remain focused on improving range, value and service for our customers.
“We are continuing to expand the capacity of our first fulfilment centre in Hatfield, with significant progress made over the summer months.
“While conducting these works, we have invested additional resources in improving our key customer performance metrics and we are pleased that these efforts are paying off.”
Average order size for the third quarter decreased from £113.59 in 2010 to £111.08 this year, showing the growing reluctance of consumers to part with their money.
Several innovative initiatives have been launched by Ocado in recent months to attract new customers, including an deal with French supermarket Carrefour and the trialling of an interactive window display at One New Change shopping centre in London.
Question marks remain over the company’s ability to establish itself as an independent trader however, having originated as an online delivery service for upmarket grocer Waitrose.
Analysts for Shore Capital, Clive Black and Darren Shirley, wrote in a market not this morning: “We believe that Ocado’s dependency upon Waitrose is its Achilles heel.
“Not least with Waitrose competing head-to-head in Ocado’s most profitable market (i.e. London) and with Waitrose’s parent now carrying no financial involvement in Ocado it has little incentive to ‘go easy’.
“Indeed, we believe that we have good grounds to assert that we do not think Ocado has a viable business model without Waitrose and, frankly the clock is ticking on that relationship too.”
The city commentators have also warned Ocado to “listen to Plan B” and not build the planned second customer fulfilment centre in Warwickshire and instead focus its attentions on the London market.
Although trading growth so far in Q4 has remained similar to that seen last quarter, Ocado’s management remain positive that this will improve before the end of its year.
Along with its trading results, Ocado also launched a Saving Pass discount today which will see at least ten per cent knocked off the price of many leading branded goods for regular users of its service.