Online grocer Ocado PLC (LON:OCDO) has reported modest growth in full-year core earnings and said it was well positioned for future growth, but there was no new news on a long awaited international deal for the group.
The FTSE 250-listed firm saw its underlying earnings increase by 3.3% to £84.3mln for the year to November 27 2016, up from £81.5mln in 2015 but slightly below the consensus forecast of £85.7mln, as revenues rose to £1.27bn, up from £1.11bn.
The group - whose range includes products supplied by upmarket grocer Waitrose and also has a distribution agreement with William Morrison Supermarkets PLC (LON:MRW) - saw its active customers increase by 13.9% in 2016 to 580,000, up from 509,000 in 2015.
It added that total order volumes grew by 17.9% to an average of over 230,000 orders per week, with the highest number of orders delivered in a week exceeding 270,000.
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However, the average basket value declined by 2.7% to £108.10, down from £111.15 in 2015, impacted by price deflation in the market and continued uptake of Ocado’s Smart Pass savings scheme.
Tim Steiner, Ocado’s chief executive officer, said: “In this ever evolving retail environment, we look forward to further developing our capabilities through innovation, creating the next generation eCommerce capabilities that will ensure our offer remains compelling for both retail and OSP customers alike."
In early trading, Ocado shares topped the FTSE 250 leader board, jumping 8.8%, or 21.5p higher to 265.9p.
Independent retail analyst Nick Bubb said: “I guess the market is impressed that Ocado have hired ex-Sainsbury guy Luke Jensen to head up the licensing business and that they remain bullish 'in the medium term.'"
Overseas key ...
However, analysts see an overseas deal as key to provide the next step up for Ocado’s growth prospects but the company missed its target of securing a deal by the end of 2015 and is still to unveil one.
Ocado has said that discussions with multiple international retailers regarding adoption of its technology were continuing.
However, long-time Ocado ‘bear’, Shore Capital analyst Clive Black remained unconvinced.
In a note to clients, he placed his ‘hold’ rating for Ocado ‘under review’, saying he was waiting to “weigh up whether or not a much fancied international tie-up(s) will indeed come through (and whether or not it will make any positive difference to the bottom line”.
He added: “In truth, we really struggle with the multiples that Ocado’s shares trade on as whilst it is shopper friendly it is not so for shareholders.”
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