Ocado publishes decent quarterly numbers again

A lot more orders, slightly cheaper basket

In the twelve weeks leading up to 9 August, Ocado.com, Fetch and Sizzle managed a 15.3 % gross turnover increase to 252 million British pounds (340 million euro). The average number of orders increased 16.6 % to 190,000 orders per week.

The strong growth in orders compensates the slight drop in average spend as that dropped compared to last year’s third quarter: down 1.1 % to 110.46 pounds (150 euro). Ocado.com experienced a smaller drop than the two specialty stores, as it only dropped 0.6 % on average compared to the third quarter of last year.

No new partner yet

Despite the good news, Ocado still has nothing to report on a possible collaboration with a foreign retailer, which is what investors eagerly anticipate. The deal with Morrisons resulted in Ocado finally becoming profitable in 2013, while a second collaboration would mean it can become an online champion.

Ocado will therefore keep investing in the newest technology, to make sure it has the best technology platform for online food retailing. CEO Steiner said in June that the company would announce a new collaboration this year, this time with a non-UK retailer, but there was no such revelation when it presented its third quarter numbers.

Collaboration with Morrisons under pressure

Steiner said in an accompanying statement that Ocado will continue to invest in innovation, despite the fierce competition in the British (online) food retail world. “We expect to continue our growth, which is slightly above average in the online food market.” He did not comment on any possible new collaborations, but he still has the fourth quarter to complete such a deal.

Ocado.com’s decent performance is a bonus for Steiner, one he sorely needed: according to the Financial Times, the Morrisons deal may come under a lot of pressure as its CEO, David Potts, has apparently declared that it will focus on a more extensive online growth in the wake of very disappointing six-month results. This may mean that Morrisons could exceed the barriers of Ocado’s deal, put in place by Potts’ predecessor. 

This statement may lead to a renegotiation with Ocado, according to the authoritative British business paper. In any case, it is an additional uncertainty putting Ocado under pressure to strike a deal with another retailer even more. Another lucrative deal with a retailer that wants to use Ocado’s top-notch technology platform to quickly launch itself online, seems to be the online retailer’s best bet for the future.