Online retailer Ocado (LON:OCDO) failed to deliver with its fiscal fourth quarter sales numbers, which were below market expectations.
Gross retail sales in the 16 weeks to 29 November totalled £351.8mln, up 13.0% from £311.4mln in the same period of 2014, but the market had been expecting growth of around 15.5%.
The number of average orders per week during the period rose 15.8% to 205,000 from 177,000 the year before, but the value of the average order fell 2.3% to £107.16 from £109.74 as the company responded to price cuts by competitors.
"We are pleased to report the thirteenth consecutive quarter of double-digit sales growth in what is a challenging and competitive grocery retail environment. Order growth remains strong with average orders per week now exceeding 200,000. This reflects the ongoing shift to online grocery shopping and the specific value customers place on Ocado's leading proposition, offering the highest service levels and widest range,” said Tim Steiner, Ocado's chief executive officer.
“We anticipate the retail environment to remain challenging, but expect to continue growing sales ahead of the online grocery market," Steiner said.
Shore Capital Markets was distinctly underwhelmed and stuck with its 'sell' rating.
The company “has not demonstrated compelling positive financial dynamics to our minds and remains on a treadmill of capital expenditure to meet market growth potential in the UK for which the free cash generation of the business is pedestrian to be kind in the season of goodwill”.
Shore's retail analyst Clive Black thinks more competitors will emerge focusing on the most profitable areas – London and the South-East – and its long-term relationship with Waitrose is in doubt.
Shares were off 5.7% at 339p in mid-morning trading.