Excitement builds ahead of launch of new venture with Marks & Spencer

Ocado (OCDO) £13.00

Gain to date: 9.5%

Original entry point: Buy at £11.87, 25 July 2019

Our bullish call on Ocado (OCDO) continues to make steady progress thanks to a positive third-quarter trading update (17 Sep).

In the three months to 1 September the firm grew its orders at a double-digit rate, faster than the first half but in line with full year guidance, as it expanded its coverage of the country and picked up more new customers.

Retail sales were up 11.4% to £386m with the number of customer orders growing by 12.1% and the average order size shrinking by 0.8% to £105.42.

The company puts the slightly lower order size down to customers ordering more frequently but buying one or two fewer items.

Newly-appointed chief executive of the retail arm, Melanie Smith, sounded fired up about the joint venture with Marks & Spencer (MKS) promising ‘the very best experience to an ever-growing number of customers’.

Finance director, Duncan Tatton-Brown, even suggested that the joint venture could start before next September: ‘There is a chance that we might bring forward that transition date’.

With the UK online grocery market expected to reach £20bn in 2023 against £12bn last year, the joint venture with M&S potentially making a contribution earlier than we thought, and the logistics platform expanding overseas, there should be plenty more good news to come from Ocado.

SHARES SAYS: Buy on market weakness

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