(Bloomberg) -- Ocado Group Plc said demand for grocery deliveries during the pandemic is so strong that it has only just begun to address a waiting list of one million potential U.K. customers.
The online retailer said the record demand helped it report a 52% rise in third-quarter revenue. Growth in its retail arm, which started selling food from Marks & Spencer Group Plc this month, should boost full-year earnings to at least 40 million pounds ($51.5 million), it said, ahead of a market consensus of about 26 million pounds.
Shares in Ocado rose as much as 7.4% in London and have almost doubled since the start of the year. M&S rose as much as 5.6%.
While Ocado has seen its main growth potential as lying in its technology licensing business, the food delivery arm that’s jointly owned with M&S is driving performance now. That business, Ocado Retail, is benefiting from Covid-wary customers wanting to shop online rather than in supermarkets.
The division switched from selling products from John Lewis Partnership Plc’s Waitrose to those from M&S at the start of the month. Before the pandemic, Ocado had about 800,000 U.K. customers.
In the first two weeks since the launch of M&S products, the average customer basket size increased by about five items, Chief Financial Officer Duncan Tatton-Brown said. Hardly any customers left Ocado, he said, despite previous questions about whether loyal Waitrose shoppers would want to switch to M&S.
M&S non-food products, such as clothing, are also boosting sales, Tatton-Brown added. Ocado Retail is on track to increase capacity by about 40% by next year.
©2020 Bloomberg L.P.
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