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Ocado boosts earnings and eyes overseas deal

Published:  30 June, 2015

Strong growth in new customers numbers helped online grocery retailer Ocado post an 11.4% increase in earnings in the 24 weeks to May 17.

The company benefited from a 30% increase in new customers over the same period last year and said it had managed to recruit from a broader demographics range.

Chief executive officer Tim Steiner said the retailer had managed to maintain average basket spend despite downward pressure on prices.

Steiner added: "The channel shift towards online grocery shopping continued during the period, with the broader grocery market remaining characterised by intense price competition and deflationary pressures.

"Against this backdrop, our relentless focus on customer satisfaction continues to drive customer numbers and like-for-like sales ahead of the online grocery market.

"The resilience of our business model and increasing operational leverage also mean that we have grown operating profit despite these industry headwinds."

Ocado is hoping to use its online platform to hook up a deal with an overseas retailer similar to the one it already has in the UK with Morrisons.

"We are excited by the possibility and reiterate our target of signing a first agreement during 2015," added Steiner.

Ken Odeluga, a senior market analyst at City Index said: "Ocado's financial year ends late in November, leaving it only about five months to get this pivotal deal done, and there no sense of imminence regarding such a deal in today's statement.

"Without such a deal it's not clear that Ocado can maintain annual profitability."