Ocado Retail Ltd, the joint venture between Ocado Group plc and Marks & Spencer Group plc, has released its trading statement for the 13 weeks to 3rd March 2024.
The release was well received by investors and Ocado shares spiked higher on the open before falling back to trade 1.9% higher at the time of writing.
The company reported an 8.1% year-on-year growth in volumes, driving a 10.6% increase in Q1 Retail revenue to £645.3m.
“Sales were up and not just because of rising prices. The venture is actually seeing significant volume growth as it wins market share. This is partly because it saw less price inflation than the wider market,” said AJ Bell investment director Russ Mould.
“This positive trading comes after a long period of disappointing performance and you can understand Marks & Spencer’s frustration – when it agreed the tie-up with Ocado in 2019 it set targets which have subsequently not been met.”
Ocado Retail’s online market share, according to Nielsen, rose to 13.5% at the end of February, a 0.7% increase over the year.
The average number of orders per week grew by 8.4% compared to Q1 2023, reaching 414,000, reflecting a 6.4% increase in active customers to 1.02 million at the end of the quarter. W
While the average basket value increased by 2.1%, the basket size in terms of the number of items remained stable year-on-year.
As a premium retailer, Ocado Retail has set about tackling perceptions of value with a pricing strategy that resulted in a modest 2.2% growth in average selling price, significantly lower than the market.
“Ocado now needs to stay on this trajectory, keep narrowing their losses and winning more market share on their road to profit. With shares trading 85% lower than their 2021 record high and even 50% lower than just last July, many investors may well be putting some stock in their baskets looking at the potential upside,” said Adam Vettese analyst at investment platform eToro.
