- Online Christmas sales soar
- Strong performance continued into January
- Expects to grow broadly in line, or slightly ahead of market
FTSE-250 online grocer Ocado unveiled a sparkling set of fourth quarter figures after strong demand over Christmas and while it expects the retail environment to remain challenging, it expects to grow in line or slightly ahead of the market.
Gross retail sales for the 16 weeks to December 1st jumped 20.1% to £271m while sales over the six weeks to January 5th rose 21.3% to £111.1m, reflecting extra capacity and strong trading in the seven days up to Christmas.
Chief Executive Officer Tim Steiner said: "We exited 2013 with a strong fourth quarter performance which continued into the start of 2014. The seven days leading up to Christmas were particularly strong with sales up nearly 29%, and several days of over £5m of sales, helped by the additional fulfilment capacity that we put in place during 2013."
Average orders per week rose 19.1% to 151,743 while average retail order size inched 0.8% higher at £111.60.
Ocado also started deliveries for Morrisons.com on schedule and as planned in January.
Steiner added: "While we are encouraged by this current trading, the retail environment remains both challenging and competitive, with consumer sentiment subdued, and we expect to continue growing broadly in line with, or slightly ahead of, the market."
Retail analysts at Jefferies agreed if Ocado might face a more muted outlook from here but reiterated their 'hold' stance.
"The combination of lack of sales acceleration at Ocado.com and possible absence of major licensing deals could represent a less helpful backdrop to the stock in coming months. Greater visibility on the extent to which 'Customer Fulfilment Centre 3' will impact the mid-term cashflow outlook would help in reviewing Ocado's net worth with greater confidence."
Analysts Clive Black and Darren Shirley at Shore Capital was more sceptical, retaining his 'sell' recommendation and questioning why the company's valuation has ascended to a "different equity solar system".
He said it remained to be seen whether the Morrison collaboration would involve heavy capital investment or more capital-light web advice and picking consultancy. "Whatever, the path to meaningful cash flow growth is not anticipated anytime soon, particularly with respect to any relationship with the group's share price (Ocado stock trades on circa four times sales)," he wrote.
"We continue to struggle with the valuation of Ocado stock against its financial performance and potential in our lifetime."
climbed back from an early decline to be flat at 521p at 12:40 on Thursday.