Ocado PLC (OCDO) has re-positioned its business from grocery delivery to a provider of retail technology solutions.
After all, the money for a startup grocer seems to lie in providing new technologies to older grocers than being a grocer itself. Ocado is clear about this transformation since 2018. Marks & Spencer (MKS), one of Ocado’s most important solutions partners within the Ocado Smart Platform (OSP), stunned the market when it paid £562.5 million upfront to fund a joint venture with Ocado in March.
In today’s latest trading statement (17 September), Ocado announced the completion of this significant joint venture in August. Furthermore, Ocado reported good growth in its retail revenue of 11.4%’. Meanwhile, growth in ‘average orders per week’ rose to 12.1%. Ocado’s quarterly retail revenue rose to £386.3 million.
These double-digit growth figures continue to affirm the sales momentum within the Ocado platform. The joint venture with Marks and Spencer, if successfully implemented, will underpin the company future for a period.
Expectations for the company are high. Ocado shares have advanced significantly since its transformation from a grocer to a better-margin retail solutions provider. Investors are banking on Ocado Plc being a sophisticated IT company with a retail arm, instead of a retail company with a complex IT department. As long as this transformation is on track, further growth in Ocado’s shares can be expected.
Ocado shares rose to 1,360p following a dip in early morning trades.