Shares in online grocery provider Ocado (OCDO) gained a further 3% to a new lifetime high of £17.32 after the firm reported a significant increase in order volumes for the quarter to date.
After 10.3% growth in retail revenues in the first quarter, growth in the second quarter topped 40% as demand spiked ‘almost overnight’ and shoppers flocked to the firm’s website to place orders.
While the average basket size is down from its peak coming into May, it remains high. At the same time shopping preferences have begun to ‘return to normal’ with the proportion of fresh and chilled goods declining from their peak relative to ambient foods.
SCALING UP IN RETAIL
‘We are facing quite a different challenge to many, as we scale up Ocado.com to play its part in feeding the nation,’ said chief executive Tim Steiner.
Although Ocado has ramped up capacity significantly, its customer fulfilment centres or CFCs, where online orders are picked and packaged for delivery, are running ‘at their peak and at their best ever efficiencies.’
However, despite the crisis accelerating the long term shift towards online grocery ordering, the firm withdrew its previous financial guidance due to uncertainty over the length of the crisis and ‘its long term impact on customers’ disposable incomes.’
SOLUTIONS ROLL-OUT
There was more positive news on the Solutions business, with the hand-over of the first international CFCs to France’s Casino and Canada’s Sobeys. The Casino site, south of Paris, went live in March while the Sobeys site in Ontario is going through pre-launch testing.
Steiner confirmed he was looking to add new Solutions partners to the firm’s roster to enable them to ‘roll out their online businesses more rapidly against a backdrop of a likely long term increase in demand for online.’
