Ocado chief says pandemic has changed consumer habits ‘for good’
But online retailer faces higher costs in its ‘solutions’ business
Ocado’s chief executive said the pandemic had changed the grocery market “for good” after the latest round of UK lockdown restrictions led to another surge in sales, although the company cautioned that investments would weigh on profits.
Results on Tuesday showed the London-listed company’s first-half revenues jumped 21 per cent from the same period a year ago to £1.32bn as tens of thousands of customers signed up.
Ocado’s core retail business finished the period with 777,000 active customers, 137,000 more than a year ago. Lockdown rules had also pushed up the average order size, the company said.
While basket sizes had declined since the restrictions had been relaxed, they remained “significantly above pre-Covid levels”, Ocado said.
Tim Steiner, chief executive, argued that changes in customer habits would endure beyond the pandemic. “It is increasingly clear that the landscape for grocery worldwide has changed for good,” he said in a statement.
Despite the positive first quarter in its core retail business, Ocado left its full year financial outlook unchanged.
The company said it was facing higher costs in other divisions such as its “solutions” business, which helps other retailers develop their own ecommerce offerings. As a result, it expected profits from these operations to be £30m lower.
The London-listed company produced an operating profit of £14.1m in the 26 weeks to May 30, although including financing costs posted a loss before tax £23.6m, which was narrower than the £40.6m a year ago.