City finds Ocado hard to digest as basket sizes shrinkComments Off on City finds Ocado hard to digest as basket sizes shrink
Shares in online supermarket Ocado sank today on concerns over its long-term prospects as it revealed that basket sizes shrunk in its fourth quarter.
The company, which has yet to produce a long-awaited international partnership, said its shoppers’ average order size was down 2.9% in the 16 weeks to November 27.
It blamed the decline on falling prices across the industry and take up of its “Smart Pass” — a savings scheme — that encouraged more frequent shopping.
But ETX Capital’s Neil Wilson said smaller baskets raise a “red flag” over profitability, as lower spending per order squeezes margins. Ocado shares fell 11.3p to 266.4p.
Ocado’s retail sales rose 13.1% to £398.1 million. That was slightly slower than the third quarter’s 13.6%. Across the full-year, group sales grew 15.1% to £1.4 billion.
Ocado originally planned to have an overseas deal secured by the end of last year. Finance director Duncan Tatton-Brown insisted the retailer remained confident that a tie-up would materialise.
“This is a marathon not a sprint,” he said.