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Ocado shows the M&S effect on its business – with fourth-quarter sales up by 35%

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Ocado today showed the first effects of its joint grocery venture with Marks & Spencer, as it reported retail sales up by 35% in the final quarter of its financial year. The retail and technology business said that full year top-line earnings were likely to rise to £70m. In the year to December 1 2019, the retailer reported earnings before interest, tax and one-off costs of £43.3m. But at the bottom line it reported a pre-tax loss of £94.1m, after costs of £94.1m. 

Ocado Retail first started to deliver M&S groceries on September 1 following the sale of 50% of the business to M&S in 2019. At the time, M&S Food managing director Stuart Machin predicted the tie-up would be “transformative”. Today Ocado Retail has reported its first results, in a fourth quarter trading statement that covers the 13 weeks between August 30 and November 29. The period also covers second lockdowns over different dates in different parts of the United Kingdom, and Ocado says that also prompted customers to keep shopping online. 

Over the quarter, Ocado Retail reported retail revenue of £579.6m, 34.9% up on the £429.7m reported last year. It delivered an average of 360,000 orders a week, 3% up from 350,000 at the same time last year, each worth an average of £133. Ocado says it is seeing a smoother trading week as more people have shifted their shopping online during the Covid-19 pandemic. Before Covid-19 there were busier and quieter days during the week but now shoppers seem happier to be home for delivery throughout the week.  The biggest selling lines were from M&S everyday essential fresh items. 

Ocado Retail chief executive Melanie Smith says: “We continue to make good progress bringing even greater choice, quality, and value to our customers following the switchover to M&S at the beginning of September. At Ocado Retail we are constantly looking to raise the bar even further and the addition of M&S products to our grocery ranges has enhanced what was already the widest choice of products available online. 

“Despite exceptional demand during the period, we have high rates of on‐time customer delivery and low rates of substitutions. This, together with our commitment to competitive prices and the freshest produce available, all delivered in a way that minimises handling and maximises hygiene, has strengthened our credentials as the UK online grocery market leader in terms of customer experience. With three new warehouses opening in 2021 which will ultimately give us 40% more capacity to our business, we look forward to being able to offer more slots to existing customers while welcoming new customers to Ocado and showing them what we can offer.”

Tim Steiner, chairman of Ocado Retail, says: “This has been an exceptionally difficult year for everyone in the country and indeed around the world. Throughout the Covid crisis, we have endeavoured to bring the best and most reliable customer experience to as many households as possible. I would like to pay tribute to all my colleagues who have played a part in making this happen, in particular our front line staff and those working in our Customer Fulfilment Centres, who have worked tirelessly to help feed the nation. I am incredibly proud of the agility the business has demonstrated through this challenging time. We enter the holiday period with confidence and look ahead to better times for all in 2021”. 

Ocado is ranked Top150 in RXUK Top500 research, while M&S is ranked Elite.

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