(Adds detail, CFO comments, shares)
LONDON, Jan 14 (Reuters) - British online grocer Ocado outperformed its traditional supermarket rivals overChristmas and said it was confident about prospects in 2015despite an escalating price war.
The firm, whose range includes products supplied by upmarketgrocer Waitrose, said on Wednesday sales growth inDecember continued at the rate it achieved in the final quarterof its 2013-14 financial year.
Gross retail sales in December rose 14.8 percentyear-on-year compared with a rise of 14.9 percent in theprevious quarter.
"We look forward to 2015 with some confidence and expect tocontinue growing sales slightly ahead of the online grocerymarket," Chief Financial Officer Duncan Tatton-Brown toldreporters.
Troubled market leader Tesco said last week itsgrocery home shopping sales increased 12.9 percent over the sixweeks to Jan. 3, while Sainsbury's were up 6 percent inits latest quarter.
Morrisons, a late entrant online through a supplydeal with Ocado, said on Tuesday online contributed 1.0 percentto its like-for-like sale performance in its Christmas tradingperiod.
All of Britain's so called "big four" grocers, whichincludes Wal-Mart's Asda, have cut prices in an attemptto stem a loss of market share to discounters Aldi and Lidl [LIDUK.UL} and are expected to cut more this year.
Ocado operates price matching schemes comparing pricesagainst Tesco and baskets of items.
"We're not concerned if there's a little bit more priceactivity in the market," said Tatton-Brown, noting Ocado'sproduct range of over 40,000 items offers some protection.
"In a price competitive environment a bit of challenge onpricing is much easier to cope with if you are seeing mid-teenssales growth and you're seeing improving cost ratios."
Shares in Ocado, down 24 percent over the last year, weredown 1.7 percent at 403.4 pence at 1020 GMT, valuing thebusiness at 2.35 billion pounds.
"If it retains a pledge to price match Tesco UK then itsgross margins may be in for a bit of a hard time," said ShoreCapital analyst Clive Black.
Ocado has not made an annual pretax profit since it wasfounded in 2000 but analysts are forecasting one of about 10million pounds for its 2013-14 which ended Nov. 30, along withunderlying core earnings of 71 million pounds.
($1 = 0.6594 pounds) (Reporting by James Davey; editing by Susan Thomas)
Tesco (TSCO)
Ocado (OCDO)
Sainsbury's (SBRY)