Ocado optimistic about yearly sales growth after flat quarter

Ocado Retail reported retail revenue of £549.4m, up 0.3%, in the 13 weeks to November 27.

The final-quarter performance ended a year in which revenues fell 3.8%, but Ocado said they were still up 40% versus 2019.

Ocado Retail a joint venture with Marks & Spencer, said it had started the new financial year strongly with sales up 15% over the five days before Christmas, and in the second half of 2023 it anticipates a return to volume growth as pandemic comparisons recede.

Last year Ocado’s average orders per week and average selling prices rose, with “an unwind of pandemic shopping behaviours, accelerated by the onset of the current cost-of-living crisis, which resulted in lower basket volumes and declining shopping frequency, in turn driving an overall year-on-year decline in revenue”.

The retalier cautioned: “Current headwinds related to inflationary costs, capacity investments to support future growth and higher marketing costs continued to weigh on profitability; for the full year, we expect close to break-even EBITDA, in line with guidance.”

In the first half of 2023 Ocado will no longer be up against the larger basket sizes that characterised the pandemic, which “will support a return to volume growth, improved capacity utilisation and reduced costs relative to sales” and that sales growth would also reflect the impact of price inflation

EBITDA is likely to be negative in the first half and positive in the second, and “marginally positive” in the full year. 

Ocado Retail chief executive Hannah Gibson said: “This year we delivered our biggest ever Christmas for our customers at Ocado. We now have close to 1 million active customers, our largest ever customer base and we see huge potential to convert those who have now trialled online shopping elsewhere to become Ocado customers.

“The year ahead will set us up to deliver strong sales and profit growth over the mid term. In 2023 we will continue to strengthen and improve our leading customer proposition, including investing in value to help customers manage cost-of-living pressures while keeping tight control of our costs. We will also be doing much more to unlock the potential of our partners, combining the benefits of Ocado’s technology with the magic of M&S products.

“While the current market environment is challenging for everyone, I am very excited about the future for Ocado Retail. Building on 20 years of amazing service and innovation, we are confident of continuing to raise the bar in online grocery and working with our partners to deliver the very best experience for our growing customer base.”

• Analysis: Why the Lotte tie-up could prove to be lucky number 12 for Ocado