- Ocado.com average basket value up 3.8%
- Shares down 18% over the past year
- Record Christmas sales for Ocado Retail
Shares in Ocado (OCDO) were up over 6% to 661p in morning trading as the online grocery retailer said retail revenue for the 13 weeks to 26 November 2023 grew by 10.9% to £609.4 million.
The 50-50 joint venture between Ocado and Marks & Spencer (MKS) added that volumes of total items ‘grew consistently’ over the period, up 4.8% year-on-year.
Average orders per week through Ocado.com grew 6.3% year-on-year to 407,000 compared with 383,000 for the same period a year ago.
Why buying Ocado shares could be a more volatile ride than you think
Ocado shares are down 18% over the past year but according to Chris Beckett, head of equity research at Quilter Cheviot, ‘the long-term story here remains a positive one.’
RECORD CHRISTMAS
Russ Mould investment director at AJ Bell, said: ‘News Ocado Retail enjoyed a record Christmas is eye-catching but partly reflects the impact of inflation.
‘The significant news is that the company is confident it delivered on guidance for a return to positive earnings in the financial year just gone.’
Mould added: ‘Online groceries are here to stay. However, whether the service can be as profitable as it was during the pandemic is open to question.
‘The economics of delivering a weekly shop to someone’s door are highly dependent on the amount they are ordering as the costs of doing so don’t really fluctuate too much. Although minimum basket sizes can be implemented, with smaller orders incurring more onerous fees.’
BETTER CHOICE
Ocado insisted consumers are being offered better choice ‘with the number of M&S products on site increasing to around 90% of the addressable range and even more Ocado Own Brand, new and unique products being introduced’.
Shoppers are also ‘benefiting from lower prices through price matching baskets to Tesco with the Ocado Price Promise’, said the company.
Hannah Gibson, Ocado Retail's CEO, said: ‘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 strong platform to build on in 2024.’
The online grocery retailer said it expects positive trends in customer acquisition in the coming year and overall revenue growth in full year 2024 is ‘expected to be in the mid-high single digits.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) owns shares in Ocado and AJ Bell. The editor of this article (James Crux) owns shares in AJ Bell.
