Ocado Forecasts Sales Surge, Wins First Leg of Patent Row

(Bloomberg) -- Ocado Group Plc won the first stage of a key patent fight in the U.S. and forecast sales in its online grocery joint venture could return to mid-teens growth next year as demand for shopping for food over the internet grows. 

The company, which is trying to license its robotic warehouse technology globally, said it was pleased a judge in the U.S. International Trade Commission made an interim finding on Monday that Ocado didn’t infringe any valid AutoStore patents. 

The decision was closely watched as Ocado’s value has soared by more than 400% since 2016 as investors bet that the British company will become the premier provider of online grocery delivery services worldwide. 

Shares in Ocado rose more than 8% in early trading in London Wednesday. 

Ocado also disclosed that sales at its 50:50 joint venture with Marks & Spencer Group Plc fell 3.9% in the 13 weeks to Nov. 28, in a statement Tuesday. The performance was impacted by a warehouse fire in July, labor shortages, as well as a normalization of customer shopping trends as people returned to the office and ate fewer meals at home. 

However, Ocado said underlying demand for online groceries overall was strong and the number of customer orders per week were up 9% compared to the same time last year. The group is increasing capacity to help it take advantage of the growing demand and has already opened three new automated warehouses in the U.K. this year. 

Ocado still expects the U.K. retail arm to deliver strong revenue growth for the year. It said in the next fiscal year it expects mid-teens revenue growth to return, at the top end of its pre-Covid range. It also plans to invest about 50 million pounds ($66 million) in the business to grow the number of customers and improve capacity levels further. 

The investment plan implies a 32% downgrade to the market consensus for Ocado Retail earnings of 156 million pounds, wrote Sherri Malek, an analyst at RBC Europe.

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