Ocado’s results are proof it can continue to build its UK retail operation despite an “extremely difficult” trading environment, analysts at Numis said today.
Ocado announced a 15.7% year-on-year increase in gross sales, comprising £507.7m revenue plus VAT and marketing vouchers in the 24 weeks ended 17 May, from £442m to £511.9m.
Subsequently, analysts Andrew Wade and Matthew Taylor believe that Ocado is “uniquely positioned to leverage its market-leading IP to support Ocado Retail and develop partnerships with global grocery retailers looking for the best online grocery fulfilment solution”.
EBITDA moved 11.4% higher from £34.3m to £38.2m – “a touch ahead” of Numis’s £37.5m estimate, while pre-tax profit fell £300,000 to £7.2m.
Ocado also pointed to 30% growth in new customers year on year, underpinned by an increasing proportion from “a broader set of customer demographics”
It said it maintained stability in its average basked size by item despite some competition-driven decline in selling prices and that own-label sales were up nearly 25% year on year.
More than half of Ocado’s customers checked out using a mobile device.
Numis noted that the challenging backdrop affected retail gross margin, but that Ocado managed to offset this in various ways.
Goldman Sachs was “encouraged” by the second quarter’s strong growth of 15.1%, as UK grocery competitors continued to deliver negative like for likes.
“We continue to believe that Ocado’s superior technology offering and the structural growth of the online channel will continue to help it deliver mid-teens sales growth and support sales of its Smart Platform to store-based grocers,” it said.
Brenda Kelly, head analyst at London Capital Group, likewise, said the second-quarter update was “encouraging with success in growing its customer base despite a challenging backdrop”.
“A solid second-quarter trading performance and news that the online delivery service was in talks with international retailers has seen shares Ocado’s shares jump 30% since the lows of late March,” she said.
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