Ocado's bears are in retreat despite its difficulties finding drivers

After a bouncing up and down like grasshoppers with ants in their pants, shares in internet grocer Ocado have traded in a range for more than a year because, despite the impressive sales growth it keeps turning in, half the City still thinks its glass is half empty.

The fact that the company last month managed to secure a big international client to licence its state of the art tech to might be changing that.

There was food for the bears, many of whom have been aggressively short selling the shares, in the latest trading announcement.

First on the menu was the company’s admission that it had lost some business due to a shortage of drivers. This is an issue affecting a lot of businesses, exacerbated by the Government’s ludicrously hard line approach to immigration, and Brexit (although the company wouldn't say that).

Given Ocado doesn’t have any bricks and mortar shops, and half its 12,000 staff are drivers, it arguably has more to worry about than most, particularly in London and the South East where it is strong and labour shortages are at their most acute.

Its sales figures were still more than respectable. They were up 11.6 per cent for the 14 weeks to December 3, and looked all the better given that Kantar’s closely watched grocery sales monitor for the 12 weeks to December 3 indicated that online sales growth across the market as a whole slowed to just 2.8 per cent. It also put Ocado’s growth at just 5.2 per cent.

Regardless of whether Kantar was picking up on an industry-wide issue, or a blip partly caused by those driver shortages, or there was a quirk in its survey, it doesn’t seem to be worrying Ocado overly much.

Bears will note that the grocer's growth was quite a bit below its 14/15 per cent run rate, while during the previous three month reporting period it turned in a shade above 13 per cent. This apparent slow down comes despite the recent expansion in the company's operational capacity, with the opening of a new centre, and excitable talk about how quickly it’s got really busy.

Expectations management is not one of this company's fortes.

But its critics look to be in retreat for now. The technology sale, which has lit a fire under the shares, was an awfully long time in coming, but if these things prove to be like London buses and the company’s optimistic talk of more to come is borne out this time, the short sellers are going to get hurt.

Shore Capital opined that the shares have been leading a charmed life. There’s nothing like making good on your promises to strengthen the magic.