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Ocado reports 20% sales lift as turnover tops £1bn for the first time; Moss Bros online sales up by 81%

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Ocado today reported a 20% lift in sales as it passed the £1bn turnover milestone in its latest full year.

A boost from its partnership with Morrisons helped it to hit gross sales of £1.02bn in the year to November 30, 20.4% up on last year’s £852.4m. Retail sales from its own grocery operation lifted by 15.3% to £972.4m from £843.0m last time.

Ocado technology and distribution centres underpin Morrisons’ online grocery operation, which launched in January.

Ocado chief executive Tim Steiner said today: “We are pleased with the continued steady growth in our business against the backdrop of a more competitive grocery market. This performance reflects an increasing number of customers who value the wide range of products, keen prices and great service made possible by Ocado’s unique operating model, and further demonstrates the ongoing shift to online grocery shopping.

“We remain committed to constantly improving the quality of the proposition to customers, which we believe will support continued growth, and although we anticipate the retail environment to remain challenging, we expect to continue growing sales slightly ahead of the online grocery market.”

In the fourth quarter, the 16 weeks to November 30, gross sales grew by 18.6% to £331.9m, while retai sales grew by 14.9% to £311.4m. Ocado said it handled an average 177,000 orders a week during the quarter, 16.4% up on last time, although the average order fell by 1.7% in value to £109.74, a figure that’s likely to reflect the effect of price deflation across the sector.

Commenting on the figures, Stephen Mader, retail insights director for Kantar Retail EMEA, said Ocado was “on the edge of having its first profitable year” with growth probably driven by geographical expansion.

“The story of 2014 has been one of Ocado approaching scale,” said Mader. “Ocado has quite a high level of fixed costs in its investments in infrastructure as well as technology compared to its top line revenue. However, as the retailer pushes into new geographies as well as additional non-food categories, we anticipate the additional scale will reflect well on the bottom line going into 2015.This is becoming visible with the profitable partnership with Morrisons as Ocado begins to use its technology assets and excess capacity to its advantage – following a similar strategy to Amazon.”

He added: “Competition in the UK supermarket industry is fierce, and Ocado has done a good job of navigating the storm, carving out a loyal shopper base while competitors have been preoccupied with the discounters. Going into 2015 Ocado must remain vigilant about continued innovation as the competition ramps up aggressively in the eGrocery space through same-day delivery, £1 delivery slots, and click & collect. Despite Tesco’s recent challenges, it is quickly closing the gap on Ocado by investing into its website and collection options to drive additional value for its online shoppers.”

• Meanwhile, Moss Bros Group , which operates formalwear outfitter Moss Bros said online sales were up by 81% in the 45 weeks to December 6. Ecommerce sales, it said, now make up 7.4% of its total turnover, while mobile and tablet account for 10% of ecommerce sales. The figures came as the company reported like-for-like sales up by 7% in the 45 weeks to December 6, and up by 7.8% in the 19 weeks to December 6. Total sales for the 45 weeks were 5.6% ahead.

Brian Brick, chief executive, said: “We continue to develop the business by leveraging the strength of our brands and our operational capabilities.”

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