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Labour Shortages Dent Ocado Retail's Sales

Published on Dec 14 2021 2:50 PM in Technology tagged: Trending Posts / M&S / Ocado

Labour Shortages Dent Ocado Retail's Sales

British online supermarket Ocado Retail, a 50:50 joint venture between Ocado Group and Marks & Spencer.

British online supermarket Ocado Retail, a 50:50 joint venture between Ocado Group and Marks & Spencer, on Tuesday reported a 3.9% fall in revenue in its latest quarter, with its performance held back by labour shortages.

Shares in Ocado were up 9.6% at 1022 GMT however as the sales fall was outweighed by news overnight that Ocado had won a patent infringement lawsuit filed by Norwegian rival AutoStore Holdings Ltd at the International Trade Commission (ITC).

Shares in M&S were down 1.1%.

Supply Chain Delays 

British retailers are grappling with delays in international supply chains that are being compounded by labour shortages in domestic transport and warehousing networks, with a shortage of drivers particularly acute.

Ocado Retail said revenue was £547.8 million ($723.7 million) in its fourth quarter to 28 November, down from £570.1 million in the same quarter last year.

Revenue growth was impacted by a high degree of staff vacancies at the beginning of the period. The JV had around 1,200 roles to fill, equivalent to about 10% of its target level of staff.

"We have halved this number to around 650 vacancies thanks to temporary sign-on incentives and increased hourly rates in certain locations," finance chief Niall McBride told reporters.

"We're getting closer to normal levels, there's still more to do."

Increased Orders 

The JV's average customer orders per week increased 8.5% to 375,100 versus the prior year, driven by a 22% increase in active customers to 832,000.

However, average basket value fell 12% to 118 pounds as many consumers returned to the office and spent less time at home.

The venture said the participation of M&S products in orders continued to be strong, at nearly 30% of the basket.

It also highlighted cost inflation due to nationwide utility price increases and dry ice shortages.

July Fire 

Ocado's revenue had fallen 10.6% in its third quarter, hurt by a July fire at its warehouse in Erith, southeast London, which disrupted operations.

The JV said the 2020-21 outturn was expected to be in line with guidance.

It forecast a return to revenue growth in 2022 at the top of the historic pre-COVID-19 range of 10-15%, and plans investments of around £50 million in 2022 to support growth.

Following a year of investment in 2021-22, the JV is targeting a rebuild in margin towards 2020-21 levels.

McBride said the emergence of the new coronavirus variant Omicron had not had a significant impact on consumer behaviour, though traffic to the website had increased.

News by Reuters edited by Donna Ahern, Checkout. For more Technology news click here. Click subscribe to sign up for the Checkout print edition.

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