16 January 2024
If you are covering Ocado’s latest financial results, please find below a comment from Chris Beckett, head of equity research at Quilter Cheviot:
“Ocado’s retail joint venture with Marks & Spencer delivered a solid trading update this morning and highlights how the business is slowly turning things around to point in the right direction. Customers numbers, sales and basket value are all up and slightly better than rivals, and although customers are buying slightly fewer items, there is a good route presented to get to higher profit margins. This will be crucial to watch for the rest of the market, as Ocado is looking use its technology and scale to prove that grocery retail can be a higher margin business than it currently is for the incumbents.
“These results also confirm a trend that we saw in other trading updates from the big retailers – post-covid normalisation. After a tough 18 months for online deliveries, we are back in the slow growth period that we were in prior to the pandemic. With Ocado taking on extra capacity in the shape of a new warehouse in Luton, it is looking to once again take advantage of this and come back to a solid level of profitability.
“The share price has been weak of late and these results have spurred some fresh volatility in it, however, the long-term story here remains a positive one.”
