Ocado Q4 Sales Growth Boosts Stock: Will it Snap Losing Streak?

Ocado Group (LON: OCDO) shares surged in early Tuesday trading, climbing more than 13% after Ocado Retail reported impressive fourth-quarter results, with a notable 17.5% increase in retail revenue, reaching £715.8 million. 

Ocado Retail, which is an online grocer and a joint venture between Ocado Group and Marks & Spencer, attributed the success to its focus on providing “unbeatable choice, unrivalled service, and reassuringly good value.”

The strong performance was driven by a 17% year-on-year growth in order volumes and a 16.9% rise in average weekly orders, now standing at 476,000. 

Active customers increased by 12.1% to 1.1 million, indicating a growing customer base engaging with the platform more frequently. 

Despite the growth in volumes, average basket sizes and selling prices remained stable.

For 2024, Ocado's retail revenue rose by 13.9% to £2.69 billion, supported by a 12.9% increase in total items sold and a 12.5% boost in average weekly orders. 

The company highlighted a 1% increase in average basket value, with prices rising significantly below the UK grocery inflation rate of 3%. 

Ocado also reported record-breaking Christmas sales, driven by popular M&S products and an efficient fulfilment network. 

The company’s shares are currently trading around the 302p per share mark after hitting a high of 307.6p just after the open. However, the stock is down more than 53% in the last 12 months and has closed lower for the last six consecutive sessions.

CEO Hannah Gibson credited the growth to Ocado’s commitment to enhancing customer service, expanding product offerings, and maintaining competitive pricing. 

“As we enter the next phase of our strategy, we are excited about the future of online grocery and our role in shaping it,” said Gibson. “Priorities for this year are raising the bar again in our leading customer proposition, making further progress on improving profitability and transitioning the business onto new technology platforms.”