Investing.com -- Shares of Ocado Retail (LON:OCDO) surged today after the company reported its trading update.
Ocado Retail surged 14.3% at 4:02 ET (0802 GMT).
The joint venture between Ocado Group plc and Marks & Spencer Group (LON:MKS) plc reported a 15.5% year-on-year increase in retail revenue, to £658 million for the 13 weeks to September 1.
“We see it as a positive sign that the Retail business can accelerate growth after cycling through tough pandemic/cost of living comps for Ocado's International partners using Ocado's CFC solution,” said analysts at Barclays in a note.
Volumes of total items grew by 15.4%, while the number of average weekly orders increased by 14.7% to 437,000.
The company also saw a rise in its customer base, with active customers up 10.3% to 1.06 million compared to the same period last year.
This is driven by improved slot availability and better service, which has helped attract and retain more customers.
Average basket value held steady at £120.97, while the number of items per basket edged up by 0.7% to 44, despite a slight decrease in average selling prices by 0.4%.
This shows that Ocado has been able to maintain its customer appeal even as it invests in price competitiveness, underlining its commitment to delivering good value despite a grocery inflation rate of 2.0% in the UK.
Ocado Retail’s strong Q3 performance has prompted the company to upgrade its full-year revenue guidance.
It now expects low double-digit percentage growth for FY24, an upward revision from its previous forecast of mid-high single-digit growth.
“We expect the solid momentum of Ocado Retail to remain, supported by its ongoing investment in prices and proposition. However, we continue to see risks to its mid-term Technology Solutions targets,” said analysts at RBC Capital Markets in a note.
There is no change to the company’s FY24 EBITDA margin guidance, which remains at about 2.5%, excluding the annual Hatfield fees of £33 million.
As Ocado Retail continues to capitalize on its strategic initiatives, the company's raised revenue outlook signals optimism about its ability to maintain strong momentum for the remainder of the year.
With a growing customer base, improved service offerings, and the backing of its technological prowess, Ocado is well-positioned to continue capturing market share in the competitive UK grocery landscape.