Ocado Retail sees strong first-quarter growth

26th Mar 2024 07:22

(Sharecast News) - Ocado Group reported strong trading at its Ocado Retail venture in the first quarter on Tuesday, with an 8.1% year-on-year increase in total item volumes propelling retail revenue to £645.3m, itself up 10.6%.

The FTSE 100 company said the operation - a joint venture with Marks and Spencer - saw its online market share, as measured by Nielsen, climb to 13.5% by the end of February, representing a 0.7% increase over the previous year.

It sid the average number of orders per week for the 13 week period ended 3 March stood at 414,000, indicating an 8.4% rise compared to the same period in 2023.

That growth aligned with a 6.4% increase in active customers, reaching 1.02 million by the end of the quarter.

Despite those gains, the average basket size remained stable year-on-year, with a slight 2.1% uptick in average basket value.

Ocado Retail's pricing strategy contributed to an average selling price growth of just 2.2%, which the company said was significantly below the market average.

Looking ahead, Ocado Retail reaffirmed its guidance, in line with that issued alongside the group's 2023 results.

It said it expected mid-to-high single-digit percentage growth in revenue and an underlying EBITDA margin of about 2.5%, excluding Hatfield fees of £33m per annum.

"We have made a strong start to the year, building on the momentum we established in 2023 through the progress of our Perfect Execution programme," said Ocado Retail chief executive officer Hannah Gibson.

"We are delivering improvements in our proposition for customers, across unbeatable choice, unrivalled service and reassuringly good value.

"During the first quarter, we stepped up our efforts: enriching our product range with the strong growth of core M&S grocery lines and the debut of Makers Market, using our unique model to showcase incredible small brands; further enhancing slot and product availability; and lowering the price of 1,700 more products in our latest Big Price Drop promotion alongside further expanding the Ocado Own Range."

Gibson said the firm's strategy resonated with customers, with volume growth building well.

"There's still so much more we can do and I'm looking forward to raising the bar even further in 2024."

Reporting by Josh White for Sharecast.com.