UK-based delivery service Ocado has reported that its retail revenue soared 40.4% year-on-year in its second quarter to date, due to increased demand for grocery deliveries amid the coronavirus.
The early announcement, as part of its AGM Trading Update and response to Covid-19, compared to growth of 10.3% in the first quarter to March 1.
Ocado claimed its Q1 results were in line with guidance with retail revenues of £441.2 million, representing a slight growth in average order size.
However, in the two months of Q2 so far, Ocado said it has ramped up capacity significantly with mature customer fulfilment centres (CFCs) running at ‘their peak’.
For example, CF4 in Erith, South East London is currently processing 110,000 standard sized orders per week versus 80,000 at the end of the first quarter.
Ocado also noted that the number of items per basket now appears to have passed its peak but remains high, as more normal shopping behaviours return.
The current coronavirus pandemic has been linked to a rise in grocery deliveries through other services. A new report from Food Foundation found that UK veg box schemes are selling double the number of boxes weekly as a result of coronavirus, while many consumer good companies’ financial results appear to be benefitting from stockpiling habits.
Since reporting its Q1 results, Ocado has delivered its first international robotic warehouses, CFCs, to its international partners Groupe Casino and Sobeys. In 2018, the UK company also confirmed that it will open 20 distribution centres in the US, as part of its service agreement with US retailer Kroger.
Ocado said it expected the long-term shift towards online grocery to accelerate post the Covid-19 crisis, however it highlighted many uncertainties about the length of the crisis, customer reactions and its long-term impact on customers’ disposable incomes.
Tim Steiner, Ocado Group CEO, said: “We are facing quite a different challenge to many, as we scale up Ocado.com to play its part in feeding the nation, and as we help our clients launch and roll out their online businesses more rapidly against a backdrop of a likely long-term increase in demand for online.
“Ocado remains in a strong position and while we should be grateful that our current challenges are around growth, expansion and increased demand, we have great empathy for all who are facing different challenges at this time.”
In its update, Ocado announced that preparations for the Marks and Spencer (M&S) switchover from Waitrose this September are on track.
The group plans to reports its interim results for the six months ended 1 June on the 14 July 2020.
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