Ocado and Marks & Spencer joint venture reports sales rise in 'strong quarter'

Ocado said on Thursday that it had a “strong” fourth quarter of the year, even as sales growth slowed slightly in the run-up to Christmas.

The company, which is now a joint venture between Ocado and Marks & Spencer, reported that retail revenue grew by 10.8% to £429.1m in the 13 weeks to 1 December.

That was in line with expectations, but slightly slower than the 11.5% growth seen in the third quarter and below the 12% seen during the same period last year.

The growth still makes Ocado the fastest-growing grocer in the UK. Average orders per week jumped by 10.4% to 350,000, but the size of the average order was mostly unchanged, at 104.9 pounds.

“I am pleased to report further progress in bringing the Ocado offer to an ever increasing number of customers in the UK,” said Melanie Smith, CEO of Ocado Retail, on Thursday.

“Another strong quarter for customer orders means that we remain the fastest growing grocer in the country. The collaboration between M&S and Ocado Group is working well.”

Ocado and Marks & Spencer in August completed a £750m deal, which saw the premium grocer take a 50% stake in Ocado’s UK retail operation.

Marks & Spencer’s food division had long been one of the bright spots for the classic British retailer, which has been battling falling sales and declining high street relevance for the last decade.

But in recent years it has seen a decline in food sales, with analysts saying that the retailer had failed to spot the shift to online grocery shopping.

The tie-up gives Marks & Spencer access to market-leading warehouse and delivery technology, and on Thursday Ocado said that it had made “good progress” on the planned switchover to Marks & Spencer food in September 2020.

Currently, 4,000 of Ocado’s 55,000 products are supplied by Waitrose, but they will be replaced by Marks & Spencer offerings from next September.

Ocado said that on Thursday that Marks & Spencer “has substitutes at the same price or lower, and of the same quality or better” for the majority of the Waitrose products that it stocks.

Ocado last month said that it will open a new “mini” hi-tech distribution warehouse in Bristol, its sixth customer fulfilment centre in the UK.

That announcement came after an Ocado distribution centre in Andover, Hampshire, caught fire in February.

In July, Ocado said that the fire, which burned for four days, cost it £100m.

Source: Yahoo