Ocado chief executive Tim Steinter looks to the future as sales climb by 30%

Click to follow
The Independent Online

The chief executive of Ocado, the online grocer, said his focus was on its share price over the medium term as they tumbled again yesterday.

This was despite Ocado delivering powerful sales growth in its third quarter – its first trading statement as a listed company.

As shares in Ocado, which floated at 180p in July, fell another 6.5 per cent to 146.8p yesterday, Tim Steinter said: "I am very focused on where the stock will be trading in two to three years' time – not by lunchtime."

Ocado, which has never made a pre-tax profit, posted a 29.5 per cent rise in sales to £126.5m for the 12 weeks to 8 August. The online grocer raised £200m in July's initial public offering to enable it to build a second distribution centre in Tamworth before the end of 2012 to expand its business.

Shares in Ocado closed down 10.3p at 146.8p yesterday. Market sources suggested that while the trading statement was largely positive, it did not change some of the bearish sentiment towards its shares.

The online grocer, which was formed by three former Goldman Sachs bankers in 2000, had initially set a pricing range of between 200p and 275p for its flotation, but was forced to slash the price at the 11th hour to 180p. Eyebrows were further raised when UBS, one of the eight investment banks that worked on the float, slapped a 167p target on its shares on 31 August.

Analysts have share price targets on Ocado ranging from 80p at Morgan Stanley to 218p at Numis, which forecasts the grocer will make a maiden pre-tax profit of £8.4m in 2011.

Speculation is rife that Morrisons will tomorrow reveal plans to launch an online grocery, and Marks & Spencer could follow suit. Jonathan Pritchard, an analyst at Oriel Securities, said: "Competition will doubtless increase in this part of the market, as Morrisons, M&S and Waitrose all compete more aggressively online as time goes by."

Ocado, which operates a huge automated warehouse in Hatfield, said the average order size was £113.59 over the 12 weeks, compared to £114.73 for the same period last year. The grocer blamed this on the launch of its Ocado Delivery Pass, which gives customers free delivery for £9.99 a month.