Ocado flags Olympic Games concerns

Online grocer Ocado has missed out on a sales boost from the Jubilee celebrations, fuelling fears the Olympics will also dent trade.

The group, which delivers Waitrose and its own products to much of the UK, said orders dipped ahead of the Jubilee, while its delivery slots meant it was unable to fully cash-in on a last minute dash for food.

With half of its sales within the M25, there is potential for the Olympics to disrupt deliveries amid the influx of visitors, while it is possible that more of its customers will go on holiday or eat out more, it warned.

Shares dropped 12% on Tuesday as it admitted there was "uncertainty" about the impact of the Games.

However, the company returned to profit in the 24 weeks to May 13. It scraped a £200,000 surplus after suffering full-year losses due to capacity constraints.

It said efforts to improve its main distribution centre at Hatfield were paying off, helping average orders per week increase 13%.

Supermarkets were boosted by the Jubilee celebrations, with Tesco enjoying more than £1 billion of sales in its best ever week outside Christmas and Sainsbury's seeing an extra two million visits from shoppers.

Despite the uncertainty over its third quarter, Ocado still expects sales growth to increase in its second half-year as a whole but analysts said the group had previously expected an acceleration in sales growth. Half-year underlying earnings increased 4.5% to £14.9 million after sales rose 12% to £332.3 million.

But Numis analyst Andrew Wade said current trading may have been hit by "aggressive vouchering" from supermarkets. He reduced his forecast for full-year underlying earnings by £1 million to £37 million.

Chief executive Tim Steiner said: "More customers are shopping online. While we remain cautious about the general economic backdrop, we are well placed to attract a significant number of these new online shoppers as we continue to enhance our offer to customers."