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Ocado reports sales boom and “exceptional demand”

Ocado (LON: OCDO) has posted a boom in sales over the nation’s second lockdown.

The group has raised its full-year forecast as the retailer benefitted from the move to online shopping and saw sales surge 35% in the three months to 29 November.

Retail revenue jumped to £579.6m and the average order spend across the period grew to £133.

Ocado is jointly owned by Marks & Spencer, its own range proving to be most popular.

Ocado Retail chief executive Melanie Smith said: “We continue to make good progress bringing even greater choice, quality and value to our customers following the switchover to M&S at the beginning of September.”

“Despite exceptional demand during the period, we have high rates of on-time customer delivery and low rates of substitutions.”

To deal with the growing sales, Ocado has three new warehouses that will contribute to operations next year and add 40% capacity.

Earnings before interest, tax, depreciation and amortisation is expected to increase from last years £60m to £70m.

Shares in the group opened lower on Thursday’s trading update, however, is expected to grow throughout the day.

John Moore, senior investment manager at Brewin Dolphin, said: “While there are indicative figures to suggest customer demand and volumes are beginning to normalise, the direction of travel remains positive and there is a lot of evidence that the shopping habits people have taken on in lockdown will endure beyond it.”

“The addition of extra capacity will help Ocado support its growth and, with a strong balance sheet and buoyed by the super-accelerated shift towards e-commerce… the company remains in a great position going into the key Christmas trading period.”

Ocado shares (LON: OCDO) are currently trading -4.85% at 2.213,11 (0948GMT).

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