Ocado Group PLC (LON:OCDO) shares rose as the firm said revenue increased 11.5% in the third quarter, meeting the online grocer’s expectations, and that new capacity at two state-of-the art warehouses with its proprietary technology is helping to meet customer demand.
Revenue increased to £348.6mln in the 13 weeks to September 2, from £312.7mln in the same period last year. Average orders per week climbed 11.4% to 283,000, while the size of the average order was stable at £106.26.
READ: Ocado benefits from Amazon's disruption in food retail
Tim Steiner, Ocado’s chief executive, said: "The new capacity from Andover and Erith, our robotic third and fourth warehouses, is helping meet consumer demand for our services and drive the channel shift which is transforming grocery retailing in the UK.”
The FTSE 100 company highlighted “strong initial growth” at the Erith Customer Fulfilment Centre, which opened this summer. The centre will be the largest automated warehouse for online grocery in the world when it runs at full capacity, said Ocado.
Last week, Erith processed more than 20,000 customer orders 14 weeks after opening, a number that Ocado said took Andover 15 months to achieve.
“We are on track to deliver a significant number of new CFCs for our Solutions partners in the coming years and as such are fulfilling our goal of changing the way the world shops,” it said.
In early morning trading, shares were up 2.6% to 936p.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “The sudden flurry of deals has no doubt been prompted in part by Amazon’s purchase of Whole Foods last year, which threatens to disrupt incumbent grocery retailers unless they have a top notch online delivery service.”
Khalaf added: “Running its large automated distribution centres doesn’t come cheap, and Ocado’s opening of a fourth UK facility in Erith is expected to eat into profits this year. The market won’t mind that too much because it both boosts Ocado’s UK capacity and acts as a shop window for potential overseas partners.”
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