Ocado keeps investors waiting for overseas deal

By James Davey

LONDON (Reuters) - Online grocer Ocado (OCDO.L) expects to sign its first technology deal with an overseas retailer shortly although the company conceded it might miss its target of getting an agreement this year.

Analysts see securing international deals in north America and western Europe as the key driver of Ocado's stock market valuation and the company said back in February that it hoped to secure one in 2015.

"We remain as confident today as we were the last time we talked to the market (Sept. 15) and we look forward to signing a deal in the relative short term," finance chief Duncan Tatton-Brown told reporters on Thursday.

He said it was a question of when, not if, a deal would be concluded. "Frankly...whether we sign it on Dec. 31 or Jan. 1, it doesn’t actually matter," he said.

Ocado signed its first third-party deal with British supermarket Morrisons (MRW.L) in 2013. That helped it to report a pretax profit for the 2013-14 year, the first in its 15-year history.

Tatton-Brown was speaking after Ocado reported a slowdown in sales growth in its fourth quarter, missing analysts' forecasts and sending its shares down by over 5 percent to 339.4 pence.

The company, whose range includes products supplied by upmarket supermarket chain Waitrose [JLP.UL], said its gross retail sales rose 13 percent to 351.8 million pounds in the 16 weeks to Nov. 29, having increased 15.3 percent in its third quarter. Analysts had expected the growth rate to be maintained.

Tatton-Brown attributed the slowdown to lower prices as Ocado reacted to cuts by rivals in an intensely competitive market.

Ocado's average orders per week increased 15.8 percent to 205,000, though average order size dipped 2.3 percent to 107.16 pounds.

"I’m not embarrassed about 13 percent sales growth on the back of nearly 16 percent growth in orders at all," said the finance chief.

He expects Ocado to continue growing sales ahead of the online grocery market and did not anticipate any change to analysts' consensus forecasts for the 2014-2015 year. These were core earnings of 81 million pounds and pretax profit of 11 million pounds, he said.

Ocado shares, which have had a rollercoaster ride since they debuted at 180 pence apiece in 2010, have fallen 15 percent so far this year.

Founded by three former Goldman Sachs bankers in 2000 Ocado has divided opinion like few other stocks.

Some view its home deliveries from giant distribution centres as the future of grocery shopping. Critics regard it as a costly and complicated venture that will never make sustained profits.

Shore Capital analyst Clive Black, a long time Ocado sceptic retained his "sell" stance on the stock.

"We think the basis of the relationship with Morrisons has evolved, the long-term future with Waitrose is highly questionable whilst competition in its key market grows," he said.

(Editing by David Holmes and Keith Weir)