Online grocery service Ocado (LON:OCDO) saw shares fall nearly 15 percent on Tuesday, despite their best volume performance in over five years.
The company boasted impressive full year earnings, with gross sales up 15.4 percent across the group to £314 million. Average orders per week rose 18.9 percent to 226,000; however the average order size fell, suggesting customers are choosing to buy fewer products more frequently.
Ocado Chief Executive Officer Tim Steiner said the results showed “strong, steady growth” across the board.
“We are confident that our commitment to further improving the customer experience through constant innovation, supported by our world-class proprietary technology, will allow us to continue to grow ahead of the online grocery market, and substantially ahead of the market overall.”
However, there was silence over long-awaited partnerships with retailers overseas that have been in the pipeline for months. Steiner also referenced the high competition from other companies such as Amazon, who have recently diversified into the grocery market.
His comments showed there was still strong pressure on margins, which are thought to be responsible for the share sell-off experienced this morning:
“As the market remains very competitive, we are seeing sustained and continuing margin pressure and there is nothing to suggest that this will change in the short term. However Ocado’s combination of choice, competitive pricing, and industry-leading service has contributed to an increase in average orders by nearly 19%, our best volume performance in more than five years.”
Amazon’s decision to partner with Morrisons for their online grocery service, Pantry, will have come as a blow to the Ocado group; the partnership has proved beneficial for troubled the trouble supermarket (LON:MRW), which looks on course to return to profit growth this year after four years of poor performance. Shares in the Big Four supermarket have risen 17 percent in the last year alone.
Ocado is currently trading down 12.08 percent at 283.10 (0931GMT).