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| Ocado warns Brexit could push up supermarket prices | Ocado warns Brexit could push up supermarket prices |
| (35 minutes later) | |
| The online grocer Ocado has said that Brexit could send supermarket prices surging as the plunging pound pushes up costs for retailers. | |
| Tim Steiner, chief executive, said the weaker pound might lead to “inflationary pressure”, but he did not believe Brexit would spark a crash in the UK retail market. | Tim Steiner, chief executive, said the weaker pound might lead to “inflationary pressure”, but he did not believe Brexit would spark a crash in the UK retail market. |
| His comments came as Ocado posted a slowdown in half-year earnings growth amid “significant challenges” in the sector. Ocado reported a 5.7% rise in underlying pre-tax earnings to £40.4m for the six months to 15 May, against 11.4% growth a year earlier. | His comments came as Ocado posted a slowdown in half-year earnings growth amid “significant challenges” in the sector. Ocado reported a 5.7% rise in underlying pre-tax earnings to £40.4m for the six months to 15 May, against 11.4% growth a year earlier. |
| But it secured another double-digit rise in retail sales, up 13.9% to £582.9m, and said it was gaining market share. | But it secured another double-digit rise in retail sales, up 13.9% to £582.9m, and said it was gaining market share. |
| The results come as it faces competition from the launch of Amazon’s rival fresh food service this month, which saw Ocado’s shares plunge to a three-year low earlier. Steiner said the group had seen “absolutely no impact whatsoever” yet from AmazonFresh, but it was “keeping a close eye” on the new competition. | The results come as it faces competition from the launch of Amazon’s rival fresh food service this month, which saw Ocado’s shares plunge to a three-year low earlier. Steiner said the group had seen “absolutely no impact whatsoever” yet from AmazonFresh, but it was “keeping a close eye” on the new competition. |
| Related: Stock markets rally after Brexit vote wipes out $3tn – business live | Related: Stock markets rally after Brexit vote wipes out $3tn – business live |
| So far, Ocado had seen no impact from Brexit on trading and consumer demand, Steiner said. “We don’t believe Brexit will have a significant impact on the business, but we’re waiting to see what happens to pricing.” | So far, Ocado had seen no impact from Brexit on trading and consumer demand, Steiner said. “We don’t believe Brexit will have a significant impact on the business, but we’re waiting to see what happens to pricing.” |
| On fears for consumer spending and UK retail, he added: “We’re not expecting the whole thing to suddenly collapse.” | On fears for consumer spending and UK retail, he added: “We’re not expecting the whole thing to suddenly collapse.” |
| Ocado imports a lot of its fresh food and produce, as do other supermarkets, and will be hit by the weak pound making overseas goods more expensive. It could bring to an end a welcome lengthy spell of falling supermarket prices for shoppers. | Ocado imports a lot of its fresh food and produce, as do other supermarkets, and will be hit by the weak pound making overseas goods more expensive. It could bring to an end a welcome lengthy spell of falling supermarket prices for shoppers. |
| But Ocado said the weaker pound would also make its technology more attractive to overseas buyers. | But Ocado said the weaker pound would also make its technology more attractive to overseas buyers. |
| Steiner said ongoing food price deflation and a fierce price war saw the supermarket sector “experience significant challenges during the period”. Ocado’s average basket value declined by 2.2% to £110.10 in the first half because of price deflation pressures. But he added: “Our increasing scale and operational efficiencies meant that we still grew profits, albeit at a slower rate.” | Steiner said ongoing food price deflation and a fierce price war saw the supermarket sector “experience significant challenges during the period”. Ocado’s average basket value declined by 2.2% to £110.10 in the first half because of price deflation pressures. But he added: “Our increasing scale and operational efficiencies meant that we still grew profits, albeit at a slower rate.” |