Online food-delivery firm Ocado (OCD) released a trading update for the 13 weeks to 1 March in which it revealed a surge in demand but left its full-year forecasts unchanged.
Retail revenues for the period rose 10.3% to £441m thanks to a 10% increase in average weekly orders and a 0.3% increase in average order size to £110.24.
The firm said that while public concern over coronavirus was limited in the last quarter, it has since ‘picked up significantly and growth in the second quarter is so far double that of the first quarter.’
However it expects this ‘forward buying’ to unwind at some point, particularly in ambient foods, therefore it is not changing its forecast of 10% to 15% growth in full-year revenues for now. After gains of 36% since last Thursday night’s close, shares eased back 3.3% to £14.30.
MANAGING DEMAND
The leap in demand since the start of March, both in terms of order numbers and basket size, has put the business under ‘unprecedented strain’ according to the statement.
In order to manage the step-change and ensure it can continue to deliver on time, the firm has stopped new customers from registering on its website, installed a queuing system in order to cope with the ‘several hundred percentage increase in web traffic’ and temporarily shut its App so that it can concentrate on web orders.
Even so, late yesterday it had to temporarily close its website as it had already sold its entire delivery capacity for the next few days. Existing orders and deliveries are unaffected but clearly the speed and size of the increase in demand is stretching its delivery capability to its limits.
