Ocado blames Games for slower sales

Online grocer Ocado said disruption caused by the Queen's Diamond Jubilee and Olympic Games hit third quarter sales.

The group, which delivers Waitrose and its own products to much of the UK, said sales growth slowed to 9.9% in the three months to August 5 - down from 12% in the first half and less than most analysts were expecting.

Ocado warned in June that London 2012 may hit trade after it missed out on the Jubilee boost enjoyed by many of its rivals. The firm said customers ordered less and at irregular times as many Britons took time off around the events.

But Tim Steiner, chief executive of Ocado, said customer ordering patterns had "returned to normal" and that the group expects sales growth to pick up again in the fourth quarter.

Ocado said it also protected profit margins by "placing less emphasis" on discount vouchers, despite many of its rivals launching aggressive money off deals to boost sales. Shares in Ocado fell 2% as analysts raised concerns over the sales slowdown.

Panmure Gordon analyst Philip Dorgan, who has been a long-time critic of the company, said the news of slowing sales growth signalled "the beginning of the end game for Ocado".

"Standing alone with a pile of debt and falling market share isn't sustainable," he said. With Ocado continuing to lose out to its larger supermarket competitors, the group's "days as a public company are limited", he warned.

But retail analyst Nick Bubb said Ocado was "fighting its corner" amid fierce vouchering activity from rivals.

Ocado revealed that average orders per week rose by 8.6% year-on-year in the third quarter to 120,494 as it continues to benefit from improvements to its main distribution centre at Hatfield. The firm suffered a £2.4 million loss in its last financial year due to capacity constraints at Hatfield.

As well as boosting its Hatfield base, Ocado is building a second distribution centre at Dordon, Warwickshire, which is due to open in the early part of next year.