Strong demand puts Ocado on course for maiden annual profit

LONDON, March 12 Wed Mar 12, 2014 3:46am EDT

LONDON, March 12 (Reuters) - British online grocer Ocado posted an 18 percent rise in first quarter retail sales, putting the firm on track to make its first annual pretax profit in 2014.

Ocado, whose range includes products supplied by upmarket grocer Waitrose, said on Wednesday its gross retail sales increased to 218.8 million pounds ($364 million) in the 12 weeks to Feb. 23.

That compares to an increase of 20.1 percent in the 16 weeks to Dec. 1.

Average orders per week rose 18.4 percent to 155,152, though average order size dipped 0.4 percent to 117.53 pounds.

Ocado's first quarter gross group sales increased 22.6 percent to 227.5 million pounds.

Shares in Ocado have risen over four-fold over the last 12 months mainly on the back of a 200 million pounds deal with Morrisons, Britain's No. 4 supermarket, to provide its online grocery operation, and on hopes it could do similar deals overseas.

Ocado said the Morrisons.com ramp up was "progressing well", having launched on Jan. 10.

"While we are encouraged by our current trading, the retail environment remains both challenging and competitive, and we expect to continue growing in line with, or slightly ahead of, the market," said Chief Executive Tim Steiner.

Last month Ocado posted a wider loss for its 2012-13 financial year, but said it was well positioned for 2013-14 - a year when analysts expect it to make a pretax profit for the first time.

The stock closed Tuesday at 572 pence, valuing the business at 3.34 billion pounds.