* Most advanced centre started operations in November
* Confidence in securing overseas deals "undiminished"
* Fourth quarter gross retail sales up 13.1 pct
* Shares down
(Recasts with finance chief, analyst comment, shares)
By James Davey
LONDON, Dec 8 Ocado believes the start
of operations at its third major UK distribution centre, its
most high-tech yet, should help it to secure a long-awaited deal
with an international partner, the online supermarket group said
Potential deals with retailers in north America and western
Europe are seen by analysts as the key influence on Ocado's
stock market valuation. But the company missed its target of
securing a deal by the end of 2015 and is still to announce one.
Ocado is courting international supermarkets to buy its
proprietary infrastructure equipment and software so they can
develop their own online grocery operations.
Its confidence in getting multiple agreements in the medium
term "remains undiminished" Chief Financial Officer Duncan
Tatton-Brown said. He pointed to last month's start of
operations at its "customer fulfilment" centre at Andover, in
southern England, which uses Ocado's most advanced equipment and
software which should help in negotiations with potential
"Yes, it's taken some time but this isn't a sprint, this is
a marathon, and we're quite confident that the new facility
opening is helpful," he told reporters after Ocado gave an
update on fourth quarter sales.
"Without doubt ... it would be easier to talk to retailers
about what we do when we can demonstrate a live facility using
the new technology that we've talked about," he said.
"It makes it easier when you can see what you're buying."
Shares in Ocado have had a rollercoaster ride since listing
at 180 pence in 2010. They were down 3.5 percent at 268.3 pence
at 0901 GMT, taking 12 month losses to 25 percent, reflecting
the lack of news on a deal and a slight slowdown in sales growth
due to industry-wide price deflation.
Ocado said gross retail sales rose 13.1 percent to 398.1
million pounds ($504.4 million) in the 16 weeks to Nov. 27,
slowing from third-quarter growth of 13.6 percent.
Ocado's range includes products supplied by upmarket
supermarket Waitrose. It also has a distribution
agreement with Morrisons, Britain's fourth biggest food
retailer, that was renegotiated in August.
Including the fees Ocado earns from Morrisons gross sales
rose 14.5 percent to 436.8 million pounds.
Average orders per week grew 17.6 percent to 241,000, though
average order size fell 2.9 percent to 105.61 pounds.
Ocado's shares took a hit in November when Morrisons
extended its relationship with Amazon, offering the
online retailer's customers same-day deliveries of goods from
"Although sales growth is a little weak, there may be some
relief that FY16 (core earnings) consensus estimates do not
appear to require radical revision," said analysts at Barclays,
who have a 'neutral" rating on the stock.
Before Thursday's update, analysts were on average
forecasting full-year core earnings of about 85 million pounds,
up from 81.5 million pounds in 2015.
($1 = 0.7893 pounds)
(Editing by David Goodman and Jane Merriman)