Ocado and M&S’ new joint venture loses steam in fourth quarter

Ocado and Marks & Spencer’s new joint venture has seen sales growth slow in its second set of results since launching in August.

Ocado Retail, reported revenue growth of 10.8 per cent to £429 million in the 13 weeks to December 1, coming generally in line with predictions.

Its fourth fiscal quarter did see sales growth drop however, slowing from 11.4 per cent sales growth seen in its first reported financial results in September.

M&S purchased 50 per cent of Ocado’s UK retail arm for £750 million earlier this year creating the new joint entity Ocado Retail, set to begin fulfilling online M&S grocery orders for the first time in its history in September 2020.

READ MORE: Ocado and M&S’ new joint venture enjoys double-digit growth

Average orders per week also grew by 10.4 per cent to 350,000, though average order size remained flat over the quarter at just over £100.

Last month Ocado Retail attributed its stellar growth to its signature state-of-the-art automated fulfilment centre in Erith, which it says now processes 70,000 orders a week.

“We have made good progress preparing for switchover date in September 2020, when the M&S food range will be available online for the first time,” the joint venture’s chief executive Melanie Smith said.

READ MORE: Ocado launches £500m bond issue to expand robotic warehouses abroad

“We are also planning fresh capacity, to offer customers more availability, and have new customer fulfilment facilities in Bristol and Purfleet, and a rebuilt state of the art facility at Andover, on the way.”

It has been a busy quarter for Ocado, which launched a £500 million bond issue earlier this month in an effort to expand its operations across the globe.

This came just days after Ocado penned a £7 billion tie up with Japanese food retailer Aeon, marking its first foray into the Asian market and signalling concerted effort to drive expansion internationally.

It also revealed plans to open its first ‘mini’ fulfilment centre in Bristol by the end of 2020 or early 2021 last week, demonstrating its ability to install its high-tech robotic warehouses at nearly any location at around twice the speed of a traditional warehouse.

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