Ocado lifts FY earnings forecast as Q4 sales jump

Online supermarket Ocado lifted its full-year earnings forecast on Thursday as it reported a jump in fourth-quarter revenue amid continued strong demand.

In an update for the 13 weeks to 29 November, the company said retail revenue grew 34.9% to £579.6m. This reflects "strong demand for online grocery and the continuation of a smoothed trading week compared to the peaks and troughs that reflected normal shopping habits pre-Covid," it said.

Average orders per week came in at 360,000, up from 350,000 in the same period a year ago.

Ocado said it now expects full-year earnings before interest, tax, depreciation and amortisation to be over £70m, up from previous guidance of at least £60m.

Melanie Smith, Ocado Retail's chief executive officer, said: "We continue to make good progress bringing even greater choice, quality, and value to our customers following the switchover to M&S at the beginning of September. At Ocado Retail we are constantly looking to raise the bar even further and the addition of M&S products to our grocery ranges has enhanced what was already the widest choice of products available online.

"With three new warehouses opening in 2021 which will ultimately give us 40% more capacity to our business, we look forward to being able to offer more slots to existing customers while welcoming new customers to Ocado and showing them what we can offer."

At 0915 GMT, the shares were down 4.6% at 2,219p.

Neil Wilson, chief market analyst at Markets.com, pointed to the fact that revenue growth slowed to 35% in the fourth quarter from 52% in the previous quarter.

"Whilst still very strong, investors are perhaps just booking some profits now on the news," he said.

"Key questions for next year and beyond are whether the shift to online continues as vaccines are rolled out, and can it really justify these enormous multiples based on the promise of future profits from its international deals for much longer?" Wilson added.