Following today’s release of Ocado’s figures for the 19 weeks ending 27th August 2023; Joe Dawson, retail analyst at GlobalData, a leading data and analytics company, offers his view: “Ocado’s Q3 FY2022/23 results offer a positive end to what has been a troubling year for the online grocer, as successive price cuts have helped it to increase revenue within its joint venture with Marks & Spencer. After showing a return to profitability in its half-year results, the focus for CEO Hannah Gibson was on “perfect execution” – ensuring deliveries were on time and in full and enticing more consumers with value-led propositions. These efforts have paid off, with a 1.5% increase in active customers to 961,000 and a growth of 6.6% in the number of mature customers (customers that have made at least five shops with Ocado) over the period. Price cuts successfully navigated the boundary between increasing volumes and hurting turnover gains, as the average basket value increased 4.2% to £120.7, and average orders per week grew 1.9% to 381,000. However, the slight drop in items per basket from 45 to 44 might suggest consumer budgets still haven’t recovered and some shoppers are also shopping elsewhere a bit more. As a result, Ocado expects to maintain its profit guidance for the year with mid-single-digit growth in revenue and marginal EBITDA growth. These results will leave shareholders feeling confident, as rumours of Amazon’s takeover that floated around before its H1 results have been sufficiently quelled – the online giant recently announced an online partnership with Iceland.
“The retailer announced it would be shutting its Hatfield customer fulfilment centre back in April 2023, and will be opening a new one in Luton in September 2023 which it expects will be twice as productive. This will put Ocado in good stead to capitalise on the increased demand for online groceries over the festive period and combined with the launch of new lines with Marks & Spencer in Autumn, this will be key to boosting sales in calendar Q4 2023. As inflation slows down and consumers recover purchasing power, the grocer must cement itself as the first port of call for new and returning online grocery shoppers by highlighting its high-quality range and convenience.”
