* Q1 gross retail sales 218.8 mln stg, up 18 pct
* Expects to grow in line with, or slightly ahead of, market
* CFO expects analysts FY pbt consensus to stay at about 18
* Shares down 3 pct, up 314 pct over past year
By James Davey
LONDON, March 12 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 this year.
Britain's traditional supermarkets are seeing little, if
any, growth in sales at their big stores but the online grocery
market is growing strongly, and Ocado's share price has risen
more than four-fold over the last 12 months.
The company has not made an annual pretax profit since it
was founded in 2000 but before its trading update on Wednesday
analysts were forecasting one of about 18 million pounds ($29.9
million) for its 2013-14 year.
"We don't think it needs to change," Chief Financial Officer
Duncan Tatton-Brown said of the forecast.
The UK online grocery market is currently worth 6.5 billion
pounds a year, according to IGD data. It forecasts the market
will grow by 124 percent over the next five years to 14.6
"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 Ocado Chief Executive Tim Steiner.
Ocado, whose range includes products supplied by upmarket
grocer Waitrose, said its gross retail sales increased
18 percent to 218.8 million pounds in the 12 weeks to Feb. 23.
That compares with an increase of 21.3 percent in the six
weeks to Jan. 5.
"There is a bit of a slowdown but it's very modest and it's
such a short period of time, it's not something that we would
worry about," Tatton-Brown told Reuters.
Average orders per week rose 18.4 percent to 155,152.
However, average order size dipped 0.4 percent to 117.53 pounds,
reflecting increased demand for Ocado's "Smart Pass" pre-pay
delivery scheme which increases the frequency of deliveries but
reduces the average basket size.
The rise of Ocado's shares over the past year has been
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
Ocado said the Morrisons.com ramp up was "progressing well",
having launched on Jan. 10. Morrisons will report full-year
results on Thursday.
The firm's stock was down 3 percent at 554.5 pence at 1016
GMT, against a 0.7 percent fall in Britain's mid-cap index
, valuing the business at 3.24 billion pounds.
Tatton-Brown said securing another third party deal was not
"We're not today spending lots of time trying to negotiate a
deal with an international player. We are, and have, and
continue to have discussions with them but we're not at the
negotiation stage," he said.
He added that Ocado was looking at potential sites to
increase its capacity and expected to make an announcement this