Ocado posted a first-quarter performance in line with City expectations, but some brokers continue to question the online grocer’s model.
The etailer reported gross sales up 24.7% to £146.2m in the 12 weeks to February 20. Average orders per week soared 26.1% to 103,207 from 81,823 in the same period in 2010.
Ocado’s average order size was slightly down, at £118.06 compared with £119.38, due to an increase in shopping frequency.
Jefferies analyst James Grzinic said Ocado’s continued top-line growth was impressive and maintained: “Superior customer experience is driving strong growth and significant margin leverage.”
He said following a share price fall Ocado’s equity looked “more reasonably valued”, but warned the challenge now was the impact of Waitrose launching within the M25.
Altium analyst Philip Dorgan said Ocado’s quarterly sales numbers provided “little to support either the bull or the bear argument”.
He said: “We have set out our stall with the bears, because we don’t believe that Ocado is capable of generating decent returns and we think that a trade buyer would struggle with the economics of a warehouse-picking model.”
Ocado has added to its ‘spoke’ distribution network in Bristol and Wimbledon. Bristol opened on March 2, increasing its coverage to over 70% of UK households and enabling it to deliver to south Wales.
Wimbledon is expected to open in May, increasing capacity by more than 14,000 orders per week.