Ocado’s ‘M&S’ magic fails to impress as shares trade down despite revenue boost
Ocado said it had helped by some “M&S magic” as the grocery chain’s joint venture with the high street stalwart boosted sales by 3.6 per cent in its first quarter.
Shares in the online grocer were last trading down 1.97 per cent or 8.9p at 443.20p.
The up market online grocer, which posted a pre-tax loss of £501m in 2022, revealed that in the first quarter of 2023 it gained revenue of £584m, up 3.4 per cent compared to the same period the previous year.
As middle class shoppers were keen to stock up on their Marks and Spencer favourites, Ocado said that the number of active customers reached 951,000 at the end of Q1, up 13.8 per cent year-on-year.
“We continue to attract more and more customers to Ocado, by investing in great value for customers including our new Ocado price promise and providing unbeatable choice and service,” Hannah Gibson, Ocado retail’s chief executive officer, said.
Ocado: What is the outlook for the rest of 2023?
Gibson said: “We are also championing smaller suppliers and creating more of the M&S magic for customers by offering more of the products they love.”
“While the trading environment remains challenging, we expect to build momentum through the second half of the year, as we improve our proposition, grow our customer base, and no longer lap Covid shopping behaviours.”
The pair of high priced grocers entered into a 50:50 joint venture in September 2020, in a deal worth an estimated £190m.
It was a shock for many in the sector as Ocado was once synonymous with rival Waitrose who ceased their partnership in the same year.
This morning investors also felt confident in the digital supermarkets outlook for the year with share price soaring 2.3 per cent.
Chris Beauchamp, chief market analyst at IG Group, said “For a firm at the sharp end of the cost of living crisis, this morning’s Ocado numbers are the first real ray of light for a while. Customer numbers are up, and even the average basket value is holding steady.
“These are the kind of numbers on which a recovery can begin, and if inflation comes down in the year ahead perhaps Ocado’s share price can recover too, reversing the dismal underperformance against the FTSE 100 so far this year.”