Ocado Retail saw its revenue growth accelerate during its fourth quarter as price cuts and the roll-out of more M&S products helped it win customers.
Over the 13 weeks to 26 November, the online grocer saw its revenue climb 10.9% to £609.4m, marking its fourth consecutive period of quarter-on-quarter growth.
Volumes rose 4.8%, while average orders per week increased by 6.3% to 407,000. The number of active customers was also up, increasing by 5.9% to 998,000, and average basket value grew 2.7%. However, basket size (number of items) fell by 4.5% to 44 items, with Ocado blaming the unwinding of pandemic shopping behaviours and the cost of living crisis.
The retailer revealed that it experienced a record Christmas and hit its highest-ever level of sales over the key trading period. Sales between 20 and 24 December rose by 7%, with a record number of deliveries on the 23 December.
The joint venture between Ocado Group and Marks & Spencer noted that its strong trading performance and focus on costs had translated through to its bottom line, with it returning to positive EBITDA in its 2022/23 financial year. It made a loss of £4m in its 2021/22 year.
However, the group cautioned that revenue growth in its new 2023/24 year was likely to be impacted by lower growth in average selling prices as it invests in sharper prices and as food price inflation continues to subside. It forecasts that its overall annual revenue growth will be in the “mid-high single digits”, while “continuing on our journey towards a high mid-single digit EBITDA margin in the midterm.”
Hannah Gibson, Ocado Retail’s Chief Executive, commented: “We made significant progress in 2023. We have focused first and foremost on being a great shopkeeper, improving our unbeatable range, great value and unrivalled experience – all underpinned by improved cost efficiencies. Our Perfect Execution programme set a high bar for our performance, and we are pleased to have finished the year with strong momentum.”
She added: “We are starting the new year with over one million active customers. Over the next 12 – 18 months, we will be embedding the foundations we have laid this year and raising the bar again for online grocery shopping. We have a really strong platform to build on in 2024.”
Ocado’s share price rose nearly 6% in early trading, having fallen 19% over the past year after demand for its service weakened after the highs of the pandemic.
NAM Implications:
- Ocado are on the way back…
- But are an online retailer with high fulfilment costs.
- The M&S collaboration will help as M&S continues to turn around….
- …but suppliers will/should remain cautious.
