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Ocado set to reveal latest lockdown sales jump

Henry Saker-Clark, PA City Reporter
·2-min read

Ocado is set to show shareholders that its retail sales boom continued into recent months as it benefited further from lockdown restrictions.

The online grocery firm has seen its shares almost triple since the start of March 2020 as an acceleration in shifting customer habits towards home grocery deliveries boosted trading.

However, investors will be keen for the group to reveal the extent of its retail growth during the latest national lockdown in its full-year trading update on Tuesday February 9.

Analysts have predicted that Ocado will reveal a 33.5% jump in group revenues to £2.35 billion for 2020. It is also expected to post earnings of £123.8 million.

In its previous update, Ocado said sales in its retail arm – which it runs as a joint venture with Marks & Spencer – had shot up 34.9% in the 13 weeks to November, to post £579.6 million in revenues for the period.

Customers placed around 360,000 orders a week on average as demand for essential groceries continued to soar as pubs, restaurant and cafe closures meant more meals were eaten at home.

The trend is set to continue this year as restrictions remain in place and shareholders will therefore be keen to see the company taking advantage of this by increasing capacity.

Ocado has previously said that it plans to open three warehouses in 2021 to increase capacity by 40%. However, it comes after a year of low capacity growth compared with the likes of Tesco, which doubled its capacity within months of the first lockdown.

Shareholders will also be particularly keen to hear more about the progress of its technology arm, Ocado Solutions, which has largely contributed the group’s £1 billion debt pile.

Over the past two years, the company has launched a raft of partnerships with global retailers including Kroger in the US, Sobeys in Canada and Aeon in Japan.

However, investors will hope that Ocado is able to highlight how these partnerships can become profitable in the near term.

Laura Hoy, equity analyst at Hargreaves Lansdown, said: “Profitability from Solutions is a long way off, but we’d like to see a timeline to success from management—even if it’s just a rough outline.

“The most important metric to watch is cash burn – the group raised over £1 billion last summer, but it can’t come back for more anytime soon, so it needs to make those funds last.”