The joint venture with M&S going live, alongside a widespread public move to online grocery deliveries, has boosted retail sales
Ocado delivers strong Q3 returns amidst pandemic
- Positive signs for Ocado investors in light of its highly anticipated M&S service partnership
- Q3 sales figures reveal a 52% rise in retail sales to £587.3m, with average orders up 9.6%
Ocado delivered strong third quarter sales figures today and reported a positive start to its new M&S service, which launched at the beginning of September. The company said retail sales had risen 52% in the third quarter to £587.3m with average orders per week up 9.6%. In the first days of the switchover to M&S, demand for their products has led to an increase in the number of products per customer basket as well as good forward demand. Ocado said it now expects full year Ebitda of at least £40m.
It was no surprise to see shares in both Ocado and M&S responding positively to today’s update, rising 5% in early trading. Given the importance of the new joint venture, the encouraging early signs are very positive for investors although it is clearly too early to make a definitive judgement. Today’s figures also suggest that the switch made by many people to online grocery deliveries during the lockdown has been sustained so far. Investors will be watching to see if basket sizes remain at similar levels to those previously achieved with Waitrose products, although it is encouraging to see that Ocado is already offering a larger range of M&S products in the new service. We continue to recommend the shares as a hold for investors seeking growth and willing to accept a medium to high level of risk.
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