Ocado Retail has notched up sales growth of 10.6% as it won back more customers thanks to price cuts and efforts to boost ranges.
The online grocer – which is run as a joint venture with Marks & Spencer – posted retail sales of £645.3 million in the 13 weeks to March 2.
Stripping out price growth, sales by volume lifted by 8.1% in the group’s first quarter.
Ocado said its active customer base rose 6.4% to 1.02 million as it “stepped up our efforts”.
But the update comes amid uncertainty over a dispute with retail partner M&S over an outstanding payment.
It was revealed last month that Ocado could take legal action against M&S unless they reach agreement over the final instalment of £190.7 million as part of the payment for the £750 million 50-50 Ocado Retail tie-up, which was launched in 2019.
Ocado Group boss Tim Steiner said the firm will “most likely” reach a negotiated settlement over the payment.
In its latest update, Ocado Retail said price inflation eased back to 2.2% in the three months, which it said was “significantly” lower than the wider market.
“This has translated to improvements in customer value perception,” according to Ocado.
But the group’s update showed that basket sizes continued to fall in the quarter, down 0.2%, although this was lower than in previous recent quarters.
It has previously put falls in the basket size down to cost-of-living pressures and as shoppers continued to change their buying habits following the pandemic.
Hannah Gibson, Ocado Retail’s chief executive, said the group “stepped up our efforts” in the first quarter, boosting its product range and cutting the price of 1,700 more items.
“Our strategy is resonating with customers and volume growth is building well,” she said.
The firm stuck by its guidance for the full year, forecasting for revenues to rise by a “mid-high single digit” percentage.