Ocado Retail Ltd, a joint venture between Ocado Group plc (LON:OCDO) and Marks & Spencer Group plc (LON:MKS), has announced its trading statement for the 13 weeks to 29 November 2020.
Highlights
● Retail Revenue grew 35%, reflecting strong demand for online grocery and the continuation of a smoothed trading week compared to the peaks and troughs that reflected normal shopping habits pre-COVID. The growth rate relative to Q3 is the result of the seasonality of the quarter
● Average order size of £1331, as customer shopping behaviour continued to normalise
● Progress in orders per week reflects underlying trends in basket size
● Erith CFC ended the period at over 130,000 orders per week2
● Customers continue to embrace the full M&S range with the biggest selling lines coming from everyday essentials in the M&S fresh categories
Key financials
| 13 weeks to 29 November 2020 | 13 weeks to 1 December 2019 | Growth5 | |
| Retail Revenue3 | £579.6m | £429.7m | 34.9% |
| Average orders per week4 | 360,000 | 350,000 | 3.0% |
Melanie Smith, Ocado Retail’s Chief Executive Officer, 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. At Ocado Retail we are constantly looking to raise the bar even further and the addition of M&S products to our grocery ranges has enhanced what was already the widest choice of products available online.
Despite exceptional demand during the period, we have high rates of on-time customer delivery and low rates of substitutions. This, together with our commitment to competitive prices and the freshest produce available, all delivered in a way that minimises handling and maximises hygiene, has strengthened our credentials as the UK online grocery market leader in terms of customer experience. With three new warehouses opening in 2021 which will ultimately give us 40% more capacity to our business, we look forward to being able to offer more slots to existing customers while welcoming new customers to Ocado and showing them what we can offer”.
Tim Steiner, Chairman of Ocado Retail, said:
“This has been an exceptionally difficult year for everyone in the country and indeed around the world. Throughout the COVID crisis, we have endeavoured to bring the best and most reliable customer experience to as many households as possible. I would like to pay tribute to all my colleagues who have played a part in making this happen, in particular our front line staff and those working in our Customer Fulfilment Centres, who have worked tirelessly to help feed the nation. I am incredibly proud of the agility the business has demonstrated through this challenging time. We enter the holiday period with confidence and look ahead to better times for all in 2021”.
Guidance
Increased social distancing restrictions, in place nationally since early November, contributed to continued strong trading performance at Ocado Retail which continued to experience a “smoothed” trading week into the year-end compared to the peaks and troughs that reflected normal shopping habits pre-COVID. Combined with the impact of operational leverage in the retail business, Ocado Group now expects full year EBITDA to be over £70m.
Outlook
Rates of sales and EBITDA growth in FY21 will be determined by the extent to which Ocado Retail returns to a “normalised” trading week and the timing of when the planned additional capacity goes live.
Ocado Group, on behalf of the joint-venture, will be hosting an analyst conference call at 7.30am today. Dial in details are: +44 33 0606 1122, room number: 438894, participant pin: 4132. A replay facility can be accessed on: ++44 33 0606 1122, room number: 095246 for 90 days following the announcement.
Notes
1. Average order size refers to results of Ocado.com and Fetch.
2. Erith CFC orders per week calculated on a pre-COVID basket size of 45 eaches
3. Retail revenue comprises revenues from Ocado.com, Fetch, and Ocado Zoom.
4. Average orders per week refers to results of Ocado.com and Fetch.
5. Growth percentage calculated on a rounded basis.
6. The figures used in this announcement are unaudited.
7. A copy of this trading update is available on www.ocadogroup.com and www.corporate.marksandspencer.com.
