Ocado promises ‘best ever Christmas’ with M&S as deliveries boom
Ocado has promised the “best ever Christmas” is ahead for its food retail joint venture with Marks & Spencer thanks to booming demand for online grocery delivery, despite shoppers buying less on each visit to its website.
Customer order numbers each week were up 9% in the 13 weeks to 28 November compared with 2020 thanks to a 22% rise in active customer numbers, according to a trading update published on Tuesday.
Ocado has been one of the winners during the coronavirus pandemic, as lockdowns prompted a wave of customers to order groceries online for the first time.
The company’s market value peaked at almost £22bn in September 2020, according to Sentieo, as investors scrambled to adjust to the pandemic economy. However, it has since fallen back to £12bn – albeit still well above its pre-pandemic level.
The rise in orders has been accompanied by pressures such as a shortage of workers and capacity constraints as Ocado races to build more warehouses. On Tuesday the company said it would spend £50m more than previously expected on investments to try to keep up.
Ocado also said shoppers were returning towards pre-pandemic trends of smaller – and less profitable – baskets.
The pressures meant that retail revenues from Ocado and Marks & Spencer’s retail joint venture fell by 3.6% during the period compared with 2020, although they remained nearly a third higher than in 2019. However, average weekly orders of 375,100 were significantly higher than the 345,000 in the same period in 2020.
Ocado nevertheless insisted it saw “strong momentum in underlying demand”. For 2022 it expects “midteens” sales growth as it opens a new automated warehouse in Bicester, Oxfordshire, and ramps up deliveries from Purfleet, Essex, and Andover in Hampshire, where a warehouse suffered significant damage from a fire in 2019.
Ocado also claimed a victory in a long-running battle against US robotic warehouse rival AutoStore. Of five patents claimed by AutoStore, the International Trade Commission found that three were invalid, one was not infringed and another was abandoned the night before trial, according to Ocado.
The robot technology is vital for Ocado, which hopes its automated systems will eventually be much more profitable than rival systems that rely on humans to fill baskets.
An Ocado spokesperson said the AutoStore action was “a misconceived attempt by AutoStore to interfere with our business in the United States”, and added that the company will “vigorously” continue its own infringement
claims against AutoStore in the US and Europe. AutoStore was approached for comment.
Ocado shares rose 3.7% on Tuesday morning, making it the top riser on the FTSE 100.