Coronavirus: Ocado reveals sales surge as it faces pay revolt
The online supermarket says sales volumes are now starting to ease following a rush ahead of, and during, the pandemic's peak.
Wednesday 6 May 2020 18:05, UK
Ocado has reported a 40% surge in retail sales since the beginning of March when demand for online grocery deliveries rose sharply due to the coronavirus outbreak.
The company used a trading update ahead of its AGM - which saw it face a backlash over executive awards - to say it had ramped up capacity "significantly" to deal with the sudden rush for essentials as the COVID-19 crisis accelerated.
Ocado said the record demand meant it was now delivering to more households than ever before but cautioned that "more normal shopping patterns" had returned in recent weeks.
As a result, the company said it was suspending its guidance on retail revenue for the financial year as a whole.
Shares rose by nearly 6% - extending gains in the year to date to nearly 39%.
Much of that growth has been attributed to its robotic technology for warehousing that has been rolled out in a series of partnerships globally.
Ocado said it expected the COVID-19 crisis to accelerate the growth in demand for online retail.
Chief executive Tim Steiner told investors: "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."
Mr Steiner's pay was in firm focus at the company's AGM as a number of institutional investors baulk at his package for 2019 of £58.7m.
The bulk of that sum was in share awards.
The meeting saw 29.8% of shareholders vote against its pay report.
Ashley Hamilton Claxton, head of responsible investment at Royal London Asset Management which has a 0.3% stake, said: "Ocado's latest pay report is a classic example of how poorly designed incentive plans can lead to excessive awards for management.
"The CEO received a share award worth nearly £50m last year, the result of a historic pay scheme that was uncapped.
"While we recognise the significant returns for shareholders which Ocado has delivered since the end of 2017, we are concerned that the Remuneration Committee did not apply any discretion, particularly as this scheme ran alongside Ocado's regular variable pay plans."
Commenting on the company's trading update, Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said Ocado was ideally placed to capture market share online as it prepares to begin its delivery partnership with M&S - a partner in its retail business.
She wrote: "Demand is outstripping supply for online groceries and as a digital only supermarket Ocado is in prime position to benefit."