Ocado retail sales surge 40 per cent in second quarter on stockpiling
Ocado retail sales have jumped 40 per cent year on year after ramping up capacity to meet delivery demand amid shopper stockpiling during the coronavirus crisis.
The online supermarket, which stopped accepting new customers for its delivery service amid the stockpiling craze at the start of the UK lockdown, today said that trend has now eased.
The grocer’s share price jumped 3.87 per cent this morning, reaching a new record high of 1,744p.
“The number of items per basket appears to have passed its peak but remains high, as more normal shopping behaviours have returned,” Ocado said. “The share of fresh and chilled products in the mix, relative to ambient, is also returning to normal.”
Ocado said shoppers were also buying more “treats” such as wine, beer and chocolate as the lockdown continued.
But shopper demand remains high despite stockpiling tailing off, the grocer added. And second quarter revenues reflected the interest, jumping 40.4 per cent compared to the same quarter in 2019.
That outstripped even the 10.3 per cent jump Ocado posted in the first quarter.
“We are facing quite a different challenge to many, as we scale up Ocado.com to play its part in feeding the nation and as we help our clients launch and roll out their online businesses more rapidly against a backdrop of a likely long term increase in demand for online,” Ocado chief executive Tim Steiner said.
“Ocado remains in a strong position and while we should be grateful that our current challenges are around growth, expansion and increased demand, we have great empathy for all who are facing different challenges at this time. In retail, we are working with our small suppliers to make sure we pay them earlier than normal and we will work closely with any who are struggling.”
Ocado ramped up capacity at its London robotic fulfilment centres to meet the spike in demand.
Its warehouse in Erith, south east London, is now processing 110,000 standard orders per week, compared to 80,000 at the end of March.
However, the online supermarket said it was “disappointed” that it had not been able to serve more people, after being forced to shutter its website to new customers last month.
“We are disappointed that we are not able to serve more customers and we are working as hard as we can to increase our capacity,” said finance chief Duncan Tatton-Brown
He added: “There is too much demand in the UK for the UK operators to serve. “
Meanwhile, Ocado’s Zoom site in west London has hit full capacity a year ahead of schedule. Ocado is planning to expand the service, which enables deliveries within an hour, over the coming “months and weeks” it said.
Tactics such as suspending mineral water deliveries has enabled Ocado to deliver to 6,000 extra households per week.
Yesterday major Ocado investor Royal London said it would oppose Steiner’s mooted £58.7m payout today, calling it “excessive”.