We’re winning business from Aldi and Lidl: Ocado boss hails recovery as M&S tie-up bears fruit

Ocado has raised its sales outlook for the year as it wins back middle-class shoppers from Aldi and Lidl.

The company said it now expected revenue to rise by more than 10 percent, having previously forecast single-digit percentage growth.

The improvement came after revenue at Ocado Retail, its joint venture with Marks & Spencer, hit £658m in the 13 weeks to September, up 15 per cent from a year earlier.

The increase was driven by more people placing orders on its website and customers filling their shopping baskets.

Hannah Gibson, director of Ocado Retail, said efforts to cut food prices had helped attract more shoppers.

She said: “We’ve seen consistent change at Tesco for 12 months running. And we’ve also seen change at some of the discounters at some points.”

Average prices fell 0.4 percent at Ocado, the company said, against grocery inflation of around 2 percent.

The average number of weekly orders rose to 437,000 in the third quarter, up from 381,000 a year earlier.

The figures were stronger than analysts had expected, sending the shares up 2.8 percent or 9.7 pence to 359 pence.

Ocado boomed during the pandemic as households spent a lot of money on home deliveries. Its shares hit an all-time high of 2,777 pence in January 2021.

But the supermarket stumbled as customers flocked to cheaper rivals when lockdown restrictions ended and inflation soared.

The company has also been hampered by setbacks in rolling out its robotic warehouses with foreign partners and fierce competition.

This has hit the share price. Ocado’s value has more than halved in the past year and is down more than 70 per cent since 2019, when its shares hit a pre-pandemic high of 1,370p.

In July, Ocado chief executive Tim Steiner urged disgruntled shareholders to keep the faith as the group narrowed its losses during the half year.

The group reported a loss of £154m for the six months to early June, compared with a loss of £290m a year ago.

“We expect to see a lot of growth over the long term,” he said at the time.

Ocado has been at war with discount chains Aldi and Lidl, which continue to steal market share from the UK’s big supermarkets.

John Moore, senior investment manager at RBC Brewin Dolphin, said Ocado was starting to deliver results after a “challenging period” for the company.

He said: “Strong growth in revenue, volume and clientele suggests the joint venture strategy is paying off.”

But the online retailer is far from out of the woods.

Russ Mould, investment director at AJ Bell, said: “There are signs that to achieve this improvement in sales, the Ocado joint venture is making concessions on price and this means that the impressive sales growth will not necessarily be reflected in improved profits, with margins being quite narrow.”