Ocado delivers profits, but sales fall as Asda gains from price wars

Shares fall despite nearing profit

Ocado is feeling the impact of Britain’s supermarket price war, with slowing sales in the last few months.

It comes as high street rival Asda emerged as the big winner among its peers following heavy discounting.

The revelation sent shares in the online grocer down 4.4 per cent to 355p, even though the company posted its first first-half profit and the chief executive, Tim Steiner, confirmed it is on course to record an annual profit for the first time in its 14-year history.

Mr Steiner said: “It wasn’t our focus to hit an [annual] profit, but it appears we will, which I’m sure will upset a few people because they won’t be able to call us the loss-making grocer any more.”

However, the speed of sales growth nearly halved in the three months to 18 May compared with the first three months of the year, and the company remained cautious on the future speed.

Sales for the six months to 18 May were up 15.6 per cent to £442.4m, while pre-tax profits hit £7.5m compared with a £1m loss a year ago.

The company continued to benefit from its £210m link-up with Morrisons, adding £12.7m to its revenues from the deal, although Mr Steiner insisted Ocado would have made a profit even without the joint venture.

He also revealed its second warehouse in Dordon, Warwickshire, which it shares with Morrisons, is performing more efficiently than the original site in Hatfield, Hertfordshire.

A third warehouse will also be opened in Andover, Hampshire, at a cost of £80m.

However, the new site will be considerably smaller than its others, with Mr Steiner explaining that the new focus was to open smaller sites that could be as economically viable as larger ones.

Clive Black at Shore Capital, remained unconvinced. He said: “We do not see the business as a disrupter in the UK grocery market because it is irrelevant within the £175bn industry.”

Meanwhile, Asda has emerged as the major winner from the recent price war among the big four supermarkets, with signs that the Walmart-owned grocer’s early start on cost-cutting is stealing customers away from rivals Tesco and Morrisons.

The supermarket pledged last year to spend £1bn over the next five years to cutting prices, and launched massive reductions to tackle the rise of discounters Aldi and Lidl.

It saw sales jump 3.6 per cent in the 12 weeks to 22 June, according to Kantar Worldpanel.

By comparison, Tesco and Morrisons launched their own price cuts in only the last few months. However, their sales fell 1.9 per cent and 3.8 per cent respectively.

Ocado is also being hit by the cuts because of its price promise to match Tesco, although bosses insist it will continue to grow faster than its rivals.

In the last 12 weeks, sales at Sainsbury’s grew 3 per cent but Asda’s impressive rise sees it start to cement its position as second-biggest retailer behind Tesco, despite signs Sainsbury’s was catching up.

Start your day with The Independent, sign up for daily news emails
Voices
Lucerne’s Hotel Château Gütsch, one of the lots in our Homeless Veterans appeal charity auction
charity appeal
Sport
Raheem Sterling of Liverpool celebrates scoring the opening goal
footballLIVE: Follow all the latest from tonight's Capital One quarter-finals
Life and Style
A woman walks by a pandal art installation entitled 'Mars Mission' with the figure of an astronaut during the Durga Puja festival in Calcutta, India
techHow we’ll investigate the existence of, and maybe move in with, our alien neighbours
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
tv
PROMOTED VIDEO
News
people

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Voices
Jimmy Mubenga died after being restrained on an aircraft by G4S escorts
voicesJonathan Cox: Tragedy of Jimmy Mubenga highlights lack of dignity shown to migrants
News
i100
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
Life and Style
tech
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Ashdown Group: Java Developer - North West London - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Selby Jennings: Corporate Communications & Marketing Specialist – Geneva

120,000 - 150,000 chf + bonus: Selby Jennings: A leading Swiss Private Banking...

Day In a Page

Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum
France's Front National and the fear of a ‘gay lobby’ around Marine Le Pen

Front National fear of ‘gay lobby’

Marine Le Pen appoints Sébastien Chenu as cultural adviser
'Enhanced interrogation techniques?' When language is distorted to hide state crimes

Robert Fisk on the CIA 'torture report'

Once again language is distorted in order to hide US state wrongdoing
Radio 1’s new chart host must placate the Swifties and Azaleans

Radio 1 to mediate between the Swifties and Azaleans

New chart host Clara Amfo must placate pop's fan armies
Homeless Veterans appeal: 'It's life, and not the Forces, that gets you'

Homeless Veterans appeal: 'It's life, and not the Forces, that gets you'

The head of Veterans Aid on how his charity is changing perceptions of ex-servicemen and women in need
Torture: It didn't work then, it doesn't work now

Torture: It didn't work then, it doesn't work now

Its use is always wrong and, despite CIA justifications post 9/11, the information obtained from it is invariably tainted, argues Patrick Cockburn
Rebranding Christmas: More public bodies are refusing to give the festival its name for fear of causing offence

Rebranding Christmas

More public bodies are refusing to give the festival its name for fear of causing offence. They are missing the point, and we all need to grow up
A Greek island - yours for the price of a London flat

A sun-kissed island - yours for the price of a London flat

Cash-strapped Greeks are selling off their slices of paradise
Pogues could enjoy fairytale Christmas No 1 thanks to digital streaming

Pogues could enjoy fairytale Christmas No 1 thanks to digital streaming

New system means that evergreen songs could top the festive charts
Prince of Wales: Gruff Rhys on his rock odyssey, and the trouble with independence

Prince of Wales: Gruff Rhys

He is a musician of wondrous oddity. He is on a perpetual quest to seek the lost tribes of the Welsh diaspora. Just don't ask Gruff Rhys if he's a national treasure...