Ocado Group Earnings: Better Profitability and Upbeat Kroger Operational Update Lift Shares

Ocado Group reported fiscal 2023 half-year results, with group revenue up 9% and group EBITDA of GBP 17 million both ahead of expectations. Ocado Retail's good performance (revenue up 5% in line with our full-year estimates) was driven by: 1) solid customer growth of 10.6% to 959,000; 2) growth in average orders per week of 4% to 392,000; and 3) the average basket value increasing 1.5%—in turn due to 8.4% higher average selling price, offset by smaller basket sizes (down 6.3% to 45 items, stabilized at 44 items over the last quarter) and lower frequency of orders due to the U.K.'s cost of living crisis. Segment profitability was EBITDA-positive in each month of the second quarter, with the firm expecting this to continue as capacity utilization of the customer fulfillment centers, or CFCs, improves, materializing into an expectation of marginally EBITDA-positive in the full year (in line with our GBP 6-million retail EBITDA forecast).