British online supermarket Ocado Retail said it was prioritising customer growth after a strong third quarter helped lift its annual revenue guidance.
As a result, the online retailer said it was focusing on competitive pricing moving forward.
The company said shopper numbers grew by 10.3% to 1.06 million in the 13 weeks to 1 September driven by improvements in customer value perception.
Consumers switched to the joint venture between Ocado Group and Marks & Spencer from Britian’s biggest supermarket Tesco, as well as discounters Aldi and Lidl, according to chief executive of Ocado Hannah Gibson.
Ocado Retail, which sells products from upmarket food retailer M&S as well as its Ocado Own Range, has a 1.8% share of Britain’s grocery market according to Kantar.
On Thursday, Gibson told reporters, “We continue to expect to invest further in price. There’s more that we want to do. There’s more we want to go after.”
When asked how sustainable it was to keep doing so, she said a trading update was not the time to discuss margins.
Outlook
While Ocado Retail on Thursday upgraded its revenue guidance to low double-digit growth for its 2023-24 financial year, it stuck to its outlook for earnings before interest, tax, depreciation and amortisation (EBITDA) margin to come in at about 2.5%.
Shares in parent company Ocado Group and Marks & Spencer traded up 7.4% and 1.3% respectively.
Ocado Retail’s sales jumped 15.5% in the quarter.
This was due to prices, down 0.4% compared to inflation of 2% in Britain’s grocery market as a whole.
Gibson said Ocado Retail’s plan was for its prices to rise at a lower rate than inflation, and added that she was optimistic about the key Christmas trading period.
She said, “We’re expecting consumers to be celebrating a lot this year.”
There was no comment given on any progress in resolving a dispute between Ocado Group and M&S over final payment for M&S’s share of the joint venture.
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