Ocado Retail, which is a joint venture between Ocado Group and Marks & Spencer, has reported a 15.5% increase in retail revenue in the third quarter of its financial year.
The British group reported revenue of £658 million (€783 million) in the period, citing 'continued momentum' driven by 'unbeatable choice, unrivalled service and reassuringly good value'.
Volume Sales Rise
Volumes grew by 15.4%, with average weekly orders rising 14.7% to 437,000. Active customers increased by 10.3% to 1.06 million, and the average basket size slightly increased, while the average basket value remained broadly stable.
The average selling price of products decreased by 0.4%, set against a UK grocery inflation rate of 2.0%, it added.
On the back of its third-quarter performance, Ocado Retail has raised its full-year revenue guidance to low double-digit percentage growth, an increase from its previous guidance of mid-high single digits.
It also expects full-year EBITDA margin of around 2.5%.
'Better Service At Better Value'
"Our strategy remains focused on giving our customers unbeatable choice, unrivalled service and reassuringly good value," commented Hannah Gibson, chief executive. "We're seeing the momentum of this, with more customers shopping with us more often, getting even better service at better value."
Gibson also highlighted improvements in the availability of delivery slots and products, better value through initiatives like the Ocado Price Promise and Big Price Drop, and a high level of order accuracy.
"We're pleased with the progress we're making and excited about how much more there is to deliver," she said.
Analyst Viewpoint
Commenting on its performance, Aliyah Siddika, retail analyst at GlobalData, said, “Amid the growing online food & grocery market, which we anticipate will rise by 6% in 2024, Ocado Retail has demonstrated resilience by maintaining its position as a leading online grocer. Its 'Express It' service, offering same-day delivery slots, was instrumental in driving a notable 14.7% increase in average weekly orders.
"The online grocer's implementation of targeted promotional discounts, such as offering 25% off on the first purchase, has also proven effective in attracting new customers. Ocado Retail has surpassed the milestone of one million active customers, indicating a significant increase in its market appeal within the UK.
“Yet, the average basket value at Ocado Retail has shown a lack of growth compared to other key performance indicators this period, with a modest increase of 0.2% in the third quarter. As consumers focus on value for money, the grocer must encourage customers to trade up to more premium products."
