Tech supermarket Ocado reveals solid sales growth amid physical retail downturn

Once dubbed the "Microsoft of retail", online supermarket Ocado has shaken off the sector's blues to post strong sales growth in its final quarter of the year.

In a trading update for the three months to the start of December, Ocado said it had seen "consistent strong" growth in sales in the region of 12 per cent for the period, rising to £390.7m in line with its guidance for the year.

The firm predicted growth of 10 to 15 per cent for the full year in July.

Helped by new warehouse facilities in Andover and Erith, its average orders per week rose 13.1 per cent to 320,000. However in a sign of the ongoing squeeze on British purse strings, the average order size shrunk by one per cent to £104.91.

Ocado chief executive Tim Steiner said the firm's investment into new robotic distribution centres enabled it to report double digit growth in new customer acquisition, evidenced by the growth in weekly orders.

"Both facilities are performing well and Erith continues to ramp up in line with our expectations," he added.

"Although in many respects 2018 has been a transformative year for Ocado, the story has only just begun. We look forward to the coming year and continuing to turn our substantial opportunities into sustainable value for all our stakeholders."

Major technology partnerships scored throughout the year, which provided Ocado's back-end tech to big groups such as US retail behemoth Kroger, have caused the young firm's shares to rise 126 per cent over the last year. Today's update triggered a slight boost of two per cent as markets opened.

"Ocado's star would appear to be on the ascent," said Fidelity Personal Investing associate director Emma-Lou Montgomery. She added that Steiner's assessment of a "transformative year" for the retailer set it apart where others have failed to shine.

Despite projections that spending this Christmas will break UK records, growth in the supermarket sector over the same period came in at its slowest rate since March last year, according to figures released on Tuesday by Kantar Worldpanel.

Interactive Investor's head of markets Richard Hunter said: "The company’s start to life as a supermarket delivery company has long been eclipsed by what is under the bonnet.Ocado’s cutting edge technology platform, which is being rolled out in the UK apace, has caught the eye of a number of global players keen to link into its order fulfilment capabilities."

Though expenditure is weighted towards expansion in those areas, Hunter said today's results provided "further confirmation that plans are coming together" with a positive outlook for Ocado overall.