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Ocado upbeat about sales growth

Online grocer Ocado has reported a 26.6% rise in underlying earnings for the year to 27 November 2011. Group sales grew by 16.6% to £642.8 million from £551.1 million the year before.

CITY & CORPORATE

Ocado upbeat about sales growth

However, the company made a pre-tax loss of £2.42 million compared with a loss of £12.2 million a year earlier.

The grocer expects sales growth of 10% in the first quarter which is broadly in line with the preceding quarter. Ocado said growth levels were likely to accelerate as 2012 progresses due to increased warehouse capacity and new specialty items being added to its product range.

Customer demand during the year continued to exceed operational capacity, partly as a result of operational difficulties at the group's distribution depot in Hatfield.  The company is building a second distribution hub at Dordon in Warwickshire and working to increase capacity at its Hatfield depot. 

Average orders per week increased by 18.6% from 92,916 to 110,219 although average order size during the year fell by 1.7% to £112.15 from £114.06.  Most of this decrease was due to the shift of customers towards the Ocado Delivery Pass which gives 10% off over 600 branded products.

Ocado’s customer numbers increased by 13.5% to 298,000 by the end of the year. Meanwhile, its own label range comprised 620 products at the year end, up from 250 products in 2010, and is now found in 70% of customer orders.

Tim Steiner, Ocado chief executive Officer commented: "Against the backdrop of a weak UK economy, we have continued to see the development of the online grocery retail market. We believe this growth is evidence of a structural shift in consumer behaviour and we will continue to see an expansion of the online grocery retail market." 

He added: "Competition in the online grocery sector is as strong as the traditional store-based sector, and will almost certainly increase." 

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