Ocado Retail sales soar as customer numbers nudge beyond 1million

Ocado Retail sales soared in the first quarter of 2024 as its Marks & Spencer joint venture saw a jump in the number of active customers and weekly orders.

Sales grew by 10.6 percent to over £645 million in the 13 weeks to March 3, reflecting an 8.4 percent annual increase in average weekly orders and active customer growth of 6.4 percent to more than 1 million .

Boss Hannah Gibson said Ocado has reduced the price of 1,700 products in the recent period, while “enriching” its product range and “improving the speed and availability of products”.

Ocado shares rose 1.3 percent to 458.5p in early trading on Tuesday. They remain roughly lower than their record highs in 2021 and percent lower than in July last year.

The results also helped up Marks & Spencer shares amid an ongoing row between the pair over the performance of the joint venture.

Ocado chief executive Tim Steiner said last month that M&S ​​owes the company “a significant amount” and that he hopes to reach a settlement over a performance-related dispute with the retail giant.

M&S must pay Ocado a final installment of £190.7m as part of the payment for the £750m partnership between the companies, Ocado Retail, which was launched in 2019.

Gibson told reporters on Tuesday that discussions with M&S over the latest payment were underway.

Ocado Retail’s online market share rose to 13.5 percent at the end of February, an increase of 0.7 percent over the year.

Average basket value increased 2.1 percent, while basket size, or the number of items purchased per order, remained stable year-over-year.

Ocado Retail maintained its full-year expectations for mid to high single-digit sales growth with an underlying pre-nasties profit margin of around 2.5 percent.

Gibson said: “We started the year strong, building on the momentum we built in 2023 through the progress of our Perfect Execution program.

‘We are delivering improvements to our customer offering, with unrivaled choice, unrivaled service and reassuringly good value for money.

‘Our strategy is resonated with customers and volume growth is developing well. There is so much more we can do and I look forward to raising the bar even higher in 2024.”

Victoria Scholar, head of investments at Interactive Investors, said the results highlight “how important value and price are in the current macroeconomic environment and in the fierce price competition from the likes of Aldi and Lidl.”

However, she noted that Ocado shares have “had an extremely difficult time so far in 2024” as they have “faced a series of price target cuts from the analyst community” amid expectations of no earnings ahead of them over the next five years will post taxes. up to six years.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, added that the recent progress is “unlikely to halt a potential shareholder revolt over executive pay, which pushed down the share price on Monday.”

She said: “Proxy advisor Institutional Shareholder Services has recommended that they will reject the group’s new remuneration policy and performance plan at the April AGM.

‘The new proposals could see the group’s CEO, Tim Steiner, paid almost £15 million. ISS said it was significantly above market standards and not in line with UK market standards and investor expectations.”