Ocado Makes Positive Start To The Year; Seeing Signs Of A Change In Market Pricing Dynamics

Ocado has posted robust first quarter trading results and signalled that the weakened pound is starting to push up prices across the market.

During the 13 weeks to 26 February, the online grocer saw its gross retail sales increase 13.1% to £352.4m. Total group sales, which include its Morrisons agreement, rose 13.3% to £384.7m.

Average order size continued to decline, although the 1.5% fall to £110.84 marked a slower pace than in recent quarters.  The group said the latest fall was driven primarily by a reduction in multi-buy promotions and further take up of the ‘Smart Pass’ scheme, which drives customers to shop more frequently. Average orders per week climbed 16.7%.

Meanwhile, the group again failed to reveal details of a much-anticipated overseas deal, although there was some positivity about the wider market with Chief Executive Tim Steiner suggesting that the supermarket price war that has raged in recent years is coming to an end.

“While the market remains very competitive, there are the first signs of a change in market pricing dynamics coming through,” he said.  However, Steiner remained cautious about the potential benefits, saying: “It remains too early to predict how this will unfold throughout the year, and in particular is dependent on any future currency movements.”

On the outlook for the rest of the year, he reiterated his belief that Ocado’s commitment to further improving customer’s online grocery experience and service through continued development of its proprietary technology “will enable us to continue to grow ahead of the online grocery market, and substantially ahead of the market overall”.