TIDMOCDO
RNS Number : 0388M
Ocado Group PLC
06 May 2020
OCADO GROUP PLC
6 May 2020
Trading update and business response to COVID-19
Ocado Group plc ("Ocado Group") issues the following updates on
current trading, on behalf of Ocado Retail Limited ("Ocado
Retail"), Ocado Group's joint venture with M&S, and a business
update for Group, to coincide with the company's Annual General
Meeting taking place later today.
Tim Steiner, Ocado Group CEO, 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".
Update on Ocado Retail
Throughout the ongoing COVID-19 crisis, Ocado Retail has shown
great resilience in its efforts to meet the needs of as many
customers in the UK as possible. At the beginning of the outbreak
demand increased significantly, almost overnight. Although this has
required difficult proactive decisions as we have prioritised our
most vulnerable and our most loyal customers, we have adapted our
platform rapidly in order to meet unprecedented demand and are now
delivering significantly more groceries to households than ever
before.
Operating our Retail business safely for our colleagues and
customers has been our number one priority. We are protecting
customers and colleagues with, amongst many changes, introducing
contact-free deliveries to the doorstep of customers' homes,
carrying out temperature monitoring at all our CFC and spoke
facilities, and now regular testing of our frontline staff for
COVID-19. We are also recognising the exceptional contribution of
our front line colleagues by giving them a 10% bonus during this
period.
Growth in Retail Revenue in the Second Quarter to date is 40.4%
up on last year, compared to 10.3% growth in the First Quarter. The
number of items per basket appears to have passed its peak but
remains high, as more normal shopping behaviours have returned, and
the share of fresh and chilled products in the mix, relative to
ambient, is also returning to normal.
We continue to price match individual products against our key
competitors with the proportion of sales on promotion initially
declining in order to discourage stockpiling in line with the
industry. Our longstanding Ocado Low Price Promise, ensures that we
continue to deliver great value, by sending vouchers to customers
in the event their basket is more expensive than a comparable
Tesco.com basket.
To support the unprecedented level of business Ocado Retail is
doing, Ocado Group has ramped up capacity significantly. Mature
customer fulfilment centres ("CFCs") are running at their peak and
at their best ever efficiencies. An example is in Dordon where some
weeks we are at close to 200 UPH* which compares to 185 before the
crisis. CFC 4, in Erith, South East London, continues to ramp up
and is currently processing 110,000 standard sized orders per week
versus an equivalent number of 80,000 at the end of the First
Quarter. The Ocado Zoom site in West London, an important part of
Ocado Group's fulfilment ecosystem, has now achieved planned end
game capacity, a year ahead of plan. At the same time, Ocado Retail
has taken a number of tactical decisions to protect and increase
capacity. Suspending the delivery of mineral water has, for
example, allowed us to deliver to 6,000 additional households per
week.
Although we expect the long term shift towards on-line grocery
to accelerate post-crisis, there remain many uncertainties about
the length of the crisis, customer reaction immediately post and
its long term impact on customers' disposable incomes and so we
have suspended our guidance for Retail Revenue for FY20 until we
can accurately forecast likely outcomes.
* grocery units per labour hour processed within the four walls
of the facility
Update on Ocado Solutions
Since reporting First Quarter Ocado Retail sales, Ocado Group
has achieved a very important milestone, with the delivery of the
first international CFCs to our international partners Groupe
Casino and Sobeys. Groupe Casino announced the go-live of its
facility at Fleury-Merogis to the south of Paris in March and
Sobeys undertook a test launch of its facility in Vaughan, Ontario
on the 27th April with a roll-out planned once testing is
complete.
The fact that these facilities have been delivered on time in
the middle of this global health crisis demonstrates the ability of
the business to execute well even under the most challenging
circumstances.
Ocado Group has also been supporting our partners to enable them
to bring an on-line grocery service to as many customers as
possible. For example, Morrisons are benefiting from additional
capacity at Dordon and are increasing the use of our platform for
in-store fulfilment allowing them to significantly increase their
online store pick capacity since the virus hit. We are continuing
to work with them to enable further expansion. Combined with our
support for Ocado Retail, we are enabling delivery of over 40% more
groceries in the UK than before the impact of COVID-19.
Notwithstanding current restrictions on social distancing in the
various markets where we operate, we are currently experiencing no
material delays in the delivery of future CFCs for Ocado Solutions
customers.
The Group continues to look to add new Solutions partners to its
roster of the most progressive and forward-looking grocers around
the world as the migration to on-line globally gains pace.
Financial Position
Overall, Ocado Group maintains a robust financial and liquidity
position with GBP1.2bn of cash on the balance sheet.
Interim results date
The Group will report its interim results for the six months
ended 1st June on the 14th of July 2020.
Ocado Group will be hosting an analyst conference call at 7.30am
today. Dial in details are: 0800 408 7373, room number 438894
participant pin code: 4132. A replay facility can be accessed on:
0800 408 7373, or through international numbers found at this link:
https://public.speakservecloud.com/dial-in-numbers/ee9d2673-7e37-4058-889c-e4a9ff59f4a7
with the following room number required: 135376 for 90 days
following the announcement.
Contacts
-- Duncan Tatton-Brown, Chief Financial Officer, Ocado Group plc, on 01707 228 000
-- David Shriver, Director of Communications, Ocado Group plc, on 01707 228 000
-- Martin Robinson at Tulchan Communications on 020 7353 4200
Notes Editors
About Ocado Retail
Online supermarket Ocado.com was established in 2000 and is one
of Britain's leading online retailers, now a 50:50 joint venture
between Ocado Group and Marks & Spencer Group plc. Covering
geographies comprising over 74% of UK households, every shopping
bag is carefully packed in one of three distribution centres using
market leading software and technology. Shopping is then delivered
direct to customers using a network of regional spokes in
brightly-coloured vans. With award-winning mobile apps, Ocado
Retail delivers over 50,000 products, including big-name brands, a
range of Ocado own brand products and a growing non-food selection.
Thoughtful service features such as colour-coded bags, digital
receipts provided in date order, reminder texts with your driver's
name, along with convenient hourly delivery slots complementing
award-winning customer service on email, phone and social
media.
About Ocado Group
Ocado Group is a UK based company admitted to trading on the
London Stock Exchange (Ticker OCDO). It comprises one of the
world's largest dedicated online grocery retailers, Ocado.com, now
a joint venture with M&S, together with its Solutions division.
Ocado Solutions is responsible for Ocado's corporate partnerships,
providing the Ocado Smart Platform as a service to retailers around
the world. OSP comprises access to Ocado's physical infrastructure
solutions, running highly efficient warehouse operations for the
single pick of products, together with the entire end-to-end
proprietary software applications required to operate a world class
online grocery business. It is underpinned by Ocado's proven
expertise and experience as a dedicated online grocer in the UK.
Ocado Solutions is partnered with leading grocery retailers
worldwide, including Kroger, Sobeys, Morrisons, Groupe Casino,
Coles Supermarkets, ICA Group, Bon Preu Group, Aeon and Ocado
Retail .
Cautionary statement
Certain statements made in this announcement are forward-looking
statements. Such statements are based on current expectations and
assumptions and are subject to a number of risks and uncertainties
that could cause actual events or results to differ materially from
any expected future events or results expressed or implied in these
forward-looking statements. Persons receiving this announcement
should not place undue reliance on forward-looking statements.
Unless otherwise required by applicable law, regulation or
accounting standard, Ocado does not undertake to update or revise
any forward-looking statements, whether as a result of new
information, future developments or otherwise.
Person responsible for arranging the release of this
announcement:
Neill Abrams
Company Secretary
Ocado Group plc
Buildings One & Two
Trident Place
Mosquito Way
Hatfield
Hertfordshire AL10 9UL
Fax: +44 (0)1707 227 997
email: company.secretary@ocadogroup.com
Ocado Group plc LEI: 213800LO8F61YB8MBC74
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END
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