Ocado’s shares experienced a significant surge of over 10% in early trading today, following the announcement of an upward revision in sales projections.
The retail division of Ocado, known as Ocado Retail, is a joint venture equally held by Ocado Group and Marks & Spencer. In the 13 weeks leading up to 1 September 2024, Ocado Retail reported a notable 15% increase in revenue, as highlighted by City AM. During this period, the company saw its revenues rise to £658 million, up from £569 million in the same quarter of 2023.
Additionally, Ocado witnessed improvements in sales volumes, with items sold rising to 249.9 million compared to 216.5 million in the previous year. The average weekly orders also saw an increase, climbing to 437,000 from last year’s count of 381,000. The number of active customers on the Ocado platform surpassed the one million mark, reflecting a 10% rise from the previous year’s figure of 961,000.
Consequently, Ocado has revised its revenue growth expectations upward to the low double digits, moving away from the earlier forecast of mid-to-high single-digit growth. Despite a minor decline in the average selling price, the surge in sales volume has effectively mitigated this impact. This is particularly notable against the background of a 2% grocery inflation rate in the United Kingdom. Ocado’s management attributes the decrease in selling prices to “continued investment in price driving further improvements in value perception.”
Hannah Gibson, CEO of Ocado Retail, elaborated on the company’s future strategy: “Our strategy remains focused on giving our customers unbeatable choice, unrivalled service and reassuringly good value.” She added, “We’re seeing the momentum of this, with more customers shopping with us more often, getting even better service at better value. We know what our customers love, and we’re focused on our proposition every day.” Gibson further highlighted the company’s commitment to offering a wide range of choices, including more M&S food, enhanced convenience with better availability of delivery slots and products, and improved value for money through initiatives like the Ocado price promise and recent price reductions. “We’re pleased with the progress we’re making and excited about how much more there is to deliver,” she concluded.
The significant rise in Ocado’s share price is a testament to the company’s robust performance and strategic initiatives, as evidenced by its recent revenue growth and expanded customer base.