Ocado lifts full-year profit forecast following home delivery boom during pandemic
Ocado has raised its full-year profit forecast after the online supermarket saw grocery sales boom during England’s second national lockdown.
Revenue at Ocado Retail, the company’s joint venture with Marks & Spencer, surged 35 per cent in the three months to 29 November to almost £580m.
The group said full-year earnings before interest, tax, depreciation and amortisation (Ebitda) for the business will be more than £70m — up from its previous forecast of £60m almost double last year’s earnings.
Ocado said the spike in sales was driven by online buyers shopping throughout the week during England’s month-long lockdown, and greater seasonal spending in the run-up to Christmas.
The average order spend across the 13-week period was £133, with M&S’ essential and fresh ranges proving most popular.
“Increased social-distancing restrictions, in place nationally since early November, contributed to continued strong trading performance at Ocado Retail,” the company said.
Tim Steiner, chairman at Ocado Retail, thanked the group’s front line staff who he said “have worked relentlessly to help feed the nation”, adding that 2020 “has been an exceptionally difficult year for everyone in the country and indeed around the world”.
The group is expected to open three new warehouses in 2021, which are set to boost capacity by around 40 per cent.
Shares fell 3.2 per cent to 2,251p at market open despite the news, though analysts noted the group’s share price would likely “push higher throughout the day”.
“While there are indicative figures to suggest customer demand and volumes are beginning to normalise, the direction of travel remains positive and there is a lot of evidence that the shopping habits people have taken on in lockdown will endure beyond it,” said John Moore, senior investment manager at Brewin Dolphin.
“The addition of extra capacity will help Ocado support its growth and, with a strong balance sheet and buoyed by the super-accelerated shift towards e-commerce… the company remains in a great position going into the key Christmas trading period.”