The summer of celebration has brought little cheer to Ocado investors. Shares in the online grocer have halved since May and this week’s update on summer trading failed to ignite a recovery.
Ocado reported on Thursday that sales had increased by 9.9% in the 12 weeks to 5 August - a slowdown on the 12% growth in the first half of the year. Shares slipped 2% on the news to 65.6p in early trading.
Much of the drop in sales growth had already been priced in at the end of June, when shares fell by 18% in a single day after Ocado warned that the Jubilee and Olympics would be causes of “disruption” rather than a boon.
The only nuggets of good news in the third quarter trading update were margin-related. Ocado said it had reduced vouchering to protect margins and reported that basket size - which is crucial to profitability - had risen 1% to £112.44.
However, UBS raised concerns about the impact of Ocado’s warehouse in Warwickshire, which is due to open in the first quarter of 2013, on margins. “We retain concerns that consensus is unduly optimistic regarding margin progression next year,” said UBS analyst Mike Tattersall. “We believe the launch of the new customer fulfilment centre in Dordon will act as a drag on margins as a function of new fixed costs and low initial capacity utilisation.”
Also on Thursday, Booker, whose shares have increased by 30% over the past year, reported a 4.3% increase in sales for the quarter to 14 September. The sales growth was strong but the numbers excluded recently-acquired Makro, which will be treated as a separate unit until the Office of Fair Trading gives the deal the all-clear. Booker, which described the performance of Makro since it bought the company in July as “challenging”, saw its shares slip by just over 1% on Thursday afternoon to 94.6p.
Imperial Tobacco also released a trading update on Thursday, in which it forecast that sales for the year to 30 September would be up 4%. Shares rose more than 1% to £23.65.
On Wednesday, shares in PZ Cussons rose 3.5% after it reported that UK sales had been “robust” in the quarter to 18 September, and that margins in its Nigeria business had improved as a result of lower raw material costs.