Ocado raises sales outlook after summer surge

Stronger summer trading has prompted Ocado to raise the outlook for sales growth this year, as the grocery deliver business gained more customers.
Ocado Retail, the 50-50 joint venture with Marks & Spencer, reported a 15.5 per cent increase in revenue to £658 million during the 13 weeks to the start of September, up from £570 million a year earlier. The result was stronger than analysts had expected, with a consensus forecast of 9 per cent revenue growth over the second half of the financial year.
The number of active customers increased by 10 per cent to 1.06 million and average orders rose 14.7 per cent to 437,000 a week. The average basket value was relatively flat, however, rising 0.2 per cent, to £120.97, compared with average grocery price inflation of 2 per cent.
Revenue this year is now expected to increase by low double-digits, better than its previous guidance of mid-to-high, single-digit growth. The outlook for the adjusted profit margin, however, has been maintained at 2.5 per cent, excluding £33 million in annual fees associated with the main Ocado group’s Hatfield warehouse.
Hannah Gibson, chief executive of the 50-50 online retail partnership, said: “Our strategy remains focused on giving our customers unbeatable choice, unrivalled service and reassuringly good value. We’re seeing the momentum of this, with more customers shopping with us more often, getting even better service at better value.”
Ocado Retail was once in effect the delivery division of Waitrose, but in September 2020 the retailers split and Ocado Group signed a deal with M&S worth about £750 million. The joint venture boomed during the pandemic, but growth slowed as customers put fewer items in their baskets and used more discount vouchers during the cost of living crisis. The joint venture sank £4 million into the red in 2022, before returning to a profit of £10 million last year.
Sales have started to improve under a new “perfect execution” plan set out by Gibson, which focuses on delivering better product choice and value.