City finds Ocado hard to digest as basket sizes shrink

Shares in online supermarket Ocado sank today on concerns over its long-term prospects as it revealed that basket sizes shrunk in its fourth quarter.

The company, which has yet to produce a long-awaited international partnership, said its shoppers’ average order size was down 2.9% in the 16 weeks to November 27.

It blamed the decline on falling prices across the industry and take up of its “Smart Pass” — a savings scheme — that encouraged more frequent shopping.

But ETX Capital’s Neil Wilson said smaller baskets raise a “red flag” over profitability, as lower spending per order squeezes margins. Ocado shares fell 11.3p to 266.4p.

Ocado’s retail sales rose 13.1% to £398.1 million. That was slightly slower than the third quarter’s 13.6%. Across the full-year, group sales grew 15.1% to £1.4 billion.

Ocado originally planned to have an overseas deal secured by the end of last year. Finance director Duncan Tatton-Brown insisted the retailer remained confident that a tie-up would materialise.

“This is a marathon not a sprint,” he said.