UK’s Ocado Retail lifts revenue outlook after shopper numbers grow

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By Sarah Young

LONDON (Reuters) -British online supermarket Ocado Retail said it was focused on competitive pricing as it sticks with its strategy of prioritising customer growth after a strong third quarter helped lift its annual revenue guidance.

Shopper numbers grew by 10.3% to 1.06 million in the 13 weeks to Sept. 1, said the company, a joint venture between Ocado Group and Marks & Spencer, driven by improvements in customer value perception.

Consumers switched to Ocado Retail from Britain’s biggest supermarket Tesco as well as discounters Aldi and Lidl, chief executive Hannah Gibson said.

Ocado Retail, which sells products from upmarket food retailer M&S as well as its Ocado Own Range, has a 1.8% share of Britain’s grocery market according to research group Kantar.

“We continue to expect to invest further in price. There’s more that we want to do. There’s more we want to go after,” Gibson told reporters on Thursday.

When asked how sustainable it was to keep doing so, she said a trading update was not the time to discuss margins.

While Ocado Retail on Thursday upgraded its revenue guidance to low double-digit growth for its 2023-24 financial year, it stuck to its outlook for EBITDA margin to come in at about 2.5%.

Shares in parents Ocado Group and M&S traded up 7.4% and 1.3% respectively.

Ocado Retail’s sales jumped 15.5% in the quarter on prices which were down 0.4% compared to inflation of 2% in Britain’s grocery market as a whole.

Gibson said Ocado Retail’s plan was for its prices to rise at a lower rate than inflation, and added she was optimistic about the key Christmas trading period.

“We’re expecting consumers to be celebrating a lot this year,” she said.

There was no comment on any progress in resolving a dispute between Ocado Group and M&S over a final payment for M&S’s share of the joint venture.

(Reporting by Sarah Young; Editing by Kate Holton, Paul Sandle and Conor Humphries)