Ocado’s sales outlook has been raised for this year due to the stronger summer trading. The grocery delivery business also gained more customers.
Ocado Retail reported a 15,5% increase in revenue during the 13 week period leading up to the beginning of September. This is a significant improvement from the £570 million reported a year ago. Analysts had predicted a 9 percent revenue increase for the second half of this financial year.
The number of customers active increased by 10% to 1,06 million, and the average order rose 14.7% to 437,000 per week. The average basket price was flat at £120.97 (up 0.2%), while the average grocery inflation rate is 2 percent.
The revenue growth this year will be in the low double digits. This is better than the previous guidance which was for a mid-to-high single digit increase. However, the outlook for adjusted profit margin has been kept at 2.5%, after excluding £33million in annual fees related to the Hatfield warehouse of the main Ocado Group.
Hannah Gibson, CEO of the joint partnership for online retail, stated: “Our strategy is to give our customers an unbeatable selection, unrivalled customer service, and reassuringly great value.” This is a trend that we’re seeing, as more and more customers are shopping with us, more frequently, to get even better service, at a better price.
Ocado Retail used to be the delivery division for Waitrose. But in September 2020 , the retailers split. Ocado Group then signed a deal worth around £750 million with M&S. The joint venture grew during the pandemic, but growth slowed during the cost-of-living crisis as customers used more vouchers and put less in their baskets. The joint venture lost £4 million in 2022, before turning a profit last year of £10 millions.
Ocado and M&S are currently in dispute over a joint venture final payment. M&S promised a second payment of £191million once the unnamed targets were met. M&S continues to record the value of the payment at zero because it does not believe the criteria have been met.
Gibson refused to comment on M&S’s discussions, but stated that it “works really closely” with M&S.
Ocado shares closed at 359 1/4p, up 9 3/4p or 2.8%.
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