Ocado Retail doubles profit forecast as sales rise 35% over lockdown

Ocado Retail has seen sales jump 35 per cent in its final quarter as “increased social distancing restrictions” drove demand for online grocery.

Ocado Retail, the joint venture between Ocado and Marks & Spencer which officially launched in September, enjoyed a sales boost of 34.9 per cent to £579.6 million over the 13 weeks to November 29.

It has now doubled its full year profit forecast compared to last year, estimating that EBITDA will come in at £70 million for 2020, £10 million higher than it forecast in November.

Customers’ excitement over the switch from Waitrose goods to M&S goods at the start of September, alongside early Christmas shopping and a continued online grocery boom also saw the company’s average orders per week grow by 10,000 to 360,000.

READ MORE: Ocado Retail sales jump 52% as customers favour new M&S goods

M&S essentials continued to be the most popular lines throughout Q4, but average order size dropped from £141 in the previous quarter to £133, though this was still above pre-coronavirus levels.

While the group has been one of the key success stories of 2020, it has been plagued by capacity shortages for much of the year as raging demand for online food orders pushed its network to its limits.

According to Ocado Retail’s chief executive Melanie Smith, the launch of three new warehouses next year will dramatically expand its ability to meet demand.

“With three new warehouses opening in 2021 which will ultimately give us 40 per cent 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”.

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