Ocado sales soar due to coronavirus as it ramps up extra capacity

The pureplay grocer said growth in its retail revenue for the second quarter to date was 40.4% up year on year, compared to a 10.3% increase in the first quarter of the year.

While the retailer reported that “the number of items per basket” has passed the peak seen in mid-March and early April, demand remained “unprecedented” and Ocado flagged the measures it had taken to increase capacity across its automated fulfilment network.

Ocado said its “mature” consumer fulfilment centres (CFCs), such as the one at Dordon, are running at full capacity. While its CFC at Ertih has increased the capacity of orders it can process up to 110,000 from 80,000 in the first quarter.

The Ocado Zoom site in West London has now achieved what the retailer called “end-game capacity” a year ahead of schedule.

To help with delivery capacity, Ocado said it had also made certain “tactical decisions”, such as suspending delivery of mineral water, which allowed for an additional 6,000 delivery slots a week.

While Ocado said it expected much, or at least some, of the increased demand for online delivery as a result of the coronavirus crisis to continue, uncertainties remain “about the length of the crisis, customer reaction immediately post, and its long-term impact on customers’ disposable incomes”.

The retailer also trumpeted the success of its technology Solutions arm which, since the UK went into lockdown in March, has opened its first two international CFCs – the first with Groupe Casino in France and the second with Sobeys in Canada.

Ocado also said that partner Morrisons had been given additional delivery capacity at its Dordon CFC as well as “increasing the use of our platform for in-store fulfilment”.

The retailer said it was in a “robust position” financially, with £1.2bn in cash on the balance sheet at the time.

Chief executive Tim Steiner, speaking ahead of today’s AGM, said: “First of all, I would like to thank my colleagues across the business for their hard work, dedication and perseverance. This continues to be a very challenging time for everybody in the world and we are committed to doing our part to help get through this crisis.

“We are facing quite a different challenge to many, as we scale up Ocado.com to play its part in feeding the nation, and as we help our clients launch and roll out their online businesses more rapidly against a backdrop of a likely long-term increase in demand for online.

“Ocado remains in a strong position and while we should be grateful that our current challenges are around growth, expansion and increased demand, we have great empathy for all who are facing different challenges at this time. In retail, we are working with our small suppliers to make sure we pay them earlier than normal and we will work closely with any who are struggling”.