Ocado Raises Revenue Guidance After Strong Growth

Ocado Retail, the joint venture between Ocado Group (LON: OCDO) and Marks & Spencer (LON: MKS), announced an increase in its revenue guidance for the current financial year in its Q3 trading statement on Thursday.

The company said the increased guidance follows a period of sustained growth, with the company now the fastest-growing grocer in the UK for seven consecutive months.

In its Q3 trading statement, Ocado revealed a 15.5% increase in retail revenue to £658 million. The growth was said to be driven by a combination of increased customer numbers, higher average orders per week, and a slight increase in basket size.

Despite investing in price reductions, Ocado revealed the average selling price only decreased by 0.4%, underscoring its commitment to offering value to customers.

Meanwhile, volumes (total items) grew 15.4% year-on-year, with average orders per week increasing 14.7% to 437k, driven by growth in active customers of 10.3% year-on-year to 1.06 million as well as improved frequency year-on-year as slot availability and our overall proposition improved.

As a result of its strong performance, Ocado raised its full-year revenue guidance to low double-digit growth, up from its previous estimate of mid-high single-digit growth.

The company said it remains confident in its ability to achieve an adjusted EBITDA margin of around 2.5% for the year, excluding annual Hatfield fees.

Hannah Gibson, Ocado Retail's Chief Executive Officer, stated: “Our strategy remains focused on giving our customers unbeatable choice, unrivalled service and reassuringly good value. We're seeing the momentum of this, with more customers shopping with us more often, getting even better service at better value.”

Gibson also emphasised the company's commitment to expanding its product range, improving delivery slot availability, and offering competitive prices.