Ocado Retail: Positive Momentum Continues in First Quarter With Key Indicators on the Rise

Ocado Retail, a joint venture between Ocado Group and Marks & Spencer, reported a first-quarter trading update for the 13 weeks to March 3, 2024, with retail revenue up 10.6%, including volume growth up 8.1% and the average sales price, or ASP, up 2.2%. The ASP was lower than market inflation, reflecting the online grocer's efforts toward value perception. Ocado Retail's good performance was driven by: 1) customer growth of 6.4% to 1,018,000, 2) growth in average orders per week of 8.4% to 414,000, and 3) the average basket value increased by 2.1%—in turn due to the higher ASP (lower than inflation) with a slightly lower basket size at 45 items per order (down 0.2%). The company maintained 2024 guidance: it expects Ocado Retail to grow at a high-single-digit rate versus 8% in our model and EBITDA margin to be around 2.5%.