Online grocery delivery firm Ocado (OCDO) posted a drop in fourth quarter sales, with customers reducing their average basket size and staff shortages affecting its ability to keep up with demand, but pointed to a strong current quarter and better growth next year.
The shares jumped 8.6% to £17.28, although much of the gains were due to a positive ruling overnight in its US patent case against Norwegian robot maker AutoStore.
MIXED UPDATE
Ocado Retail, the 50/50 joint venture with Marks & Spencer (MKS), reported revenues for the three months to November of £548 million, a drop of 4% on the same period last year and below market forecasts of £600 million.
The company said order growth slowed and the average basket size fell after more customers went back to the office and spent less time cooking at home compared with last year.
Sales growth was also held back by a shortage of labour, particularly at the start of the quarter, while the firm also flagged cost inflation due to rising energy prices.
However, on a two-year basis, retail revenues were up almost 32% for the quarter and the average number of orders per week was up 14%, demonstrating the structural uplift in online shopping as a result of the pandemic.
Also, customer acquisition remained strong with almost a million people signed up, and sales of M&S products through the system continued to grow, reaching nearly 30% of the average basket.
The firm rounded out its trading update by saying it expected its ‘best-ever Christmas’ and a return to mid-teens percentage revenue growth in 2022 thanks to new sites opened during this year.
BIG US COURT WIN
Foremost in investors minds, however, was the news that a judge at the US International Trade Commission had rejected an attempt by Norwegian robot maker AutoStore to stop Ocado from expanding its presence in the US.
The case dates back to October last year when AutoStore said it would sue the UK firm for infringing its technology patents and would ask the court to ban imports of its robots into the US.
Ocado uses robots in ‘hives’ in its warehouses to pick customer orders, a critical part of its solutions platform which it has sold to US grocery firm Kroger and hopes to sell to many more customers.
The online retailer launched a counter-suit against AutoStore claiming the latter had infringed its intellectual property rights with regard to both its new Blackline robots and its Router operating software.
In the end, the ITC ruled that three of the four AutoStore patents were invalid and a fourth hadn’t been infringed, while AutoStore dropped its fifth patent claim the night before the trial.
An Ocado spokesperson said: ‘We have consistently stated that Ocado does not infringe any valid AutoStore IP, and we are pleased that the judge has now agreed with us.
'This was a misconceived attempt by AutoStore to interfere with our business in the United States. We intend vigorously to continue our infringement claims against AutoStore in the United States and Europe.’
