Waitrose reports Christmas sales boost, as analysts eye Ocado fallout

6th Jan 2015 12:41

The first of the major supermarkets to update on Christmas trading, upmarket grocer Waitrose, part of the John Lewis group of companies, lifted like-for-like sales by 2.8%.Waitrose generated total sales, not including petrol, of £728m in the five weeks ending 3 January, up 7% on the same period a year before.The growth was in part thanks to particularly strong online sales growth year-on-year, with grocery sales through Waitrose.com up 26.3% as the retailer said it was expanding its online capabilities around the London area.Analysts at broker Shore Capital said they believed the performance "will stand up very well against the superstore groups and will probably exceed the sales momentum of Marks & Spencer too"..."all credit should go to Waitrose for cranking out such a robust performance to our opinion."Waitrose, which has roughly a 5% share of the UK multiple grocery market through 334 stores in Great Britain and the Channel Islands plus 29 outlets in Welcome Break service stations, said it planned to open a new Waitrose.com fulfilment centre in Coulsdon, South London on 3 March.This will have twice the capacity of the existing fulfilment warehouse it is replacing, with the Acton centre scheduled to be demolished to make way for the new HS2 high-speed train line.ShoreCap added that Waitrose's online performance should "comfortably exceed" the sales growth to be reported by online grocery specialist Ocado, which reports its festive trade on Wednesday 14 January.Ocado has a deal to deliver Waitrose's online orders at least 1 March 2017, when there is a break clause in the contract, with notice to be served on 1 September 2015.Waitrose began its own click-and-collect trial in October, with customers able to pick up online purchase from lockers at London underground stations, while Ocado last year launched into a £200m partnership with Morrison's that some analysts say was inspired by Waitrose's building of the Acton centre. "The relationship between Waitrose and Ocado may return as a debating point in 2015 as the John Lewis grocer has the capability to serve notice, should it wish, on its relationship with the online facilitator," analysts Clive Black and Darren Shirley wrote on Tuesday. "Ocado shifts a lot of goods for Waitrose and so we do not see the latter cutting its nose to spite its face. That said, Waitrose could see a growing commercial benefit from self-controlling the distribution of its product and debilitating a competitor that has, at times, materially stressed relations. Hence, long muted international agreements may become ever more important for the Ocado investment story."In December, fellow broker Jefferies said it believed there was "a high probability" that Waitrose will elect to rescind the contract, resulting in notice being served this coming September.