Ocado Sales Boosted by Home Shopping During Covid Lockdowns
(Bloomberg) -- Ocado Group Plc reported a bumper 27% rise in half-year retail revenue as more consumers turned to online grocery shopping in an era of social distancing.
The U.K. company said it was boosted by unprecedented demand during the pandemic, which nearly doubled its retail profit, but investment in its faster-growing overseas licensing business caused a pretax loss of about 41 million pounds ($51 million).
Ocado said demand was so strong in its U.K. food online delivery arm, which is now jointly owned with Marks & Spencer Group Plc, that “years of growth were condensed into a matter of months.”
In the hour following Prime Minister Boris Johnson’s announcement of a nationwide lockdown on March 22, Ocado’s website was visited by as many people that came the site in the previous quarter, Chief Executive Officer Tim Steiner said. Ocado still doesn’t have the capacity to meet all the demand, and the company has about 1 million names on a waiting list to become customers, showcasing future growth potential.
The start of Britain’s lockdown was marked by panicked consumers stockpiling goods, but demand has now tapered off to more normal levels. Steiner believes that many people new to online grocery shopping will continue to shop this way even after the immediate crisis of the pandemic is over.
The U.K. online grocer’s report follows an update late Monday from German recipe-box delivery service HelloFresh SE, which also said it got a significant boost.
Ocado began as an online grocer, but its main growth potential is in automating supermarket delivery warehouses. It has opened two such sites overseas. Steiner said since the pandemic it was receiving more enquiries from prospective partners while its existing partners were keen to accelerate the rollout of its technology.
The company’s outlook is positive, but it has not provided a forecast for retail revenue growth. Ocado plans 600 million pounds of capital expenditure this year, mostly on its licensing business.
Ocado shares traded 0.8% lower Tuesday in London. They’ve risen 58% since the start of the year. HelloFresh fell 3.6% in Frankfurt.
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