UK online grocer Ocado sees sustained margin pressure

LONDON, Sept 13 (Reuters) - British online grocer Ocado reported a 13.6 percent rise in quarterly retail sales but said the intensely competitive market was causing margin pressure and cautioned it would not go away any time soon.

The firm, whose range includes products supplied by upmarket supermarket Waitrose, said gross retail sales were 286.4 million pounds ($381.6 million) in the 12 weeks to August 7, its fiscal third quarter, up from 252 million pounds in the same period last year.

That compares to first half growth of 13.9 percent.

"As the market remains very competitive, we are seeing sustained and continuing margin pressure and there is nothing to suggest that this will change in the short term," said Chief (Taiwan OTC: 3345.TWO - news) Executive Tim Steiner.

But he said he still expected Ocado to grow ahead of the online grocery market, and substantially ahead of the market overall.

He highlighted a 19 percent increase in average orders per week to 226,000 in the period - Ocado's best performance in over five years.

Ocado shares have had a rollercoaster ride since they debuted at 180 pence in 2010.

Analysts see winning international agreements with retailers in north America and western Europe as the key influence on Ocado's stock market valuation. However, the company missed its target of securing a deal by the end of 2015 and is still to announce one.

Last month Ocado did, however, agree an amended distribution deal with Morrisons, Britain's No. 4 supermarket, which boosted sentiment in the stock.

Its shares have increased 11 percent over the last month and closed Monday at 322 pence, valuing the business at 2 billion pounds ($2.7 billion). ($1 = 0.7506 pounds) (Reporting by James Davey; editing by Kate Holton)