Ocado sales continue to climb despite ongoing price wars

By Erin Smith

Published: 14 September, 2016

Ocado saw group sales climb 15.4% to £314 million in the third quarter despite the chief executive indicating that the continued price wars were expected to continue in the future.

Tim Steiner, the chief executive of Ocado said: "As the market remains very competitive, we are seeing sustained and continuing margin pressure and there is nothing to suggest that this will change in the short-term.

But Steiner seemed pleased with the company's results saying it was "our best performance in more than five years."

Retail sales increased 13.6% to £286.4m, with its food delivery service average number of orders per week increasing 18.9% to 226,000 this year. The figures cover the last 12 weeks ending on 7 August 2016.

Martin Lane, a representative from www.money.co.uk said that the results were overall very positive but the warning from the CEO regarding the ongoing price wars made investors nervous. He said: "While Ocado posted really positive results this morning, shares slumped because their CEO admitted they're under real pressure due to the continued battle of the supermarkets. It's fairly unusual for a CEO to talk so candidly about the difficulties it's facing so investors acted tentatively."

Lane also pointed out that the recent launch of the Amazon Fresh is also a new challenge the company will be facing.

"With Aldi and Lidl causing mayhem for the whole sector by driving down prices, Ocado now faces huge competition from Amazon too. This is only going to intensify the price war between the online supermarket retailers, which is a good thing for bargain hunters and shoppers on a budget," said Lane.

Ocado announced last month it had resigned its deal with Morrisons to help the grocer expand its online offering nationally.

Printer friendly version