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Ocado delivers 13% sales growth despite order sizes hit

Online grocer Ocado has delivered double-digit sales growth but saw order sizes take a hit from the enduring supermarket price war.

Retail sales jumped 13.1% to £398.1 million in the 16 weeks to November 27, up from £351.8 million over the period last year.

Average order sizes fell 2.9% to £105.61 in the fourth quarter, as it felt the force of "continued industry-wide price deflation" and customers buying fewer goods more often after joining its "Smart Pass" membership service.

Group sales, which includes Ocado's deal to deliver orders for Morrisons.com, also clocked strong growth, rising 14.5% to £436.8 million in the period.

Chief executive Tim Steiner said the firm had taken steps to support its expansion by opening a new distribution centre in Andover, Hampshire.

"The strong growth in sales and order volumes reflects the attractiveness of our retail offer to customers," he added.

Shares in Ocado took a hammering last month after Morrisons unveiled a new one-hour delivery service through Amazon, shifting the competition up another gear in the fiercely competitive grocery sector.

The wider supermarket price war also shows no signs of abating, as the so-called Big Four supermarkets - Tesco, Sainsbury's, Asda and Morrisons - continue to slug it out with German discounters Aldi and Lidl.

Ocado said full-year retail sales climbed 15.1% to £1.4 billion in the 52 weeks to November 27, while group sales lifted 13.6% to £1.3 billion over the period.

Despite the hefty sales rise, the group saw its share price take another hit on the London market, dropping 2.5% in the morning session.

The group's stock price has plummeted around 20% since December last year as investors grow increasingly impatient over a long-awaited overseas deal.

Neil Wilson, senior market analyst at ETX Capital, said the drop in the firm's average basket size was a "red flag that might have investors a little worried".

"In September we noted that Ocado appeared to have reached its peak in terms of basket size, with average orders down to £107.94 from £111.75.

"That has now fallen again to £105.61 and it's hard to see it rising in such a highly competitive market. We may see it creep up a little but only as a result of supplier-led inflation being passed through."

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