Ocado remains ‘confident’ as it returns to profitability

Ocado posted group EBITDA of £16.6m for the 26 weeks to May 28, 2023, up from a loss of £13.6m during the same period last year, while Ocado Retail posted a “small loss” of £2.5m during the first half despite EBITDA remaining positive throughout its second quarter.

Ocado Retail’s revenue increased 5% year on year to reach £1.18bn for the period and group revenue climbed 8.6% to £1.37bn.

The retailer, which is a joint venture between Ocado Group and Marks & Spencer, said the average basket value for the period also increased by 1.5%, which it credited to an increased average selling price that was “offset by smaller basket sizes and lower frequency of orders as customers managed their overall basket spend”.

Ocado also attributed its half-year performance to the success of its Ocado Price Promise initiative, which is a “key strategy” for the retailer for its “retention of customers and the increase in the total active customer base”.

Ocado Retail said it anticipates volume-driven growth to “accelerate” in its fourth quarter and Ocado Retail is expected to be “marginally EBITDA positive” for the full year.

The group emphasised that the first-half performance has boosted “confidence in the full-year financial outcome” and it said it will continue to prioritise “ongoing excellence in operational execution and financial discipline with costs and cash flow” as it maintains its full-year financial guidance.

Ocado Group chief executive Tim Steiner said: “Ocado Group has made good progress over the last six months. Technology Solutions has continued to deliver our industry-leading Ocado Smart Platform around the world and the opening of the first CFC for AEON, Japan’s biggest food retailer, in Chiba City, just outside Tokyo, is a landmark for the grocery sector.

“In the UK, Ocado Logistics had a steady, profitable first half and Ocado Retail is making good progress, with a return to profitability in Q2. Our operations in the UK remain an important demonstration of the potential for our international ambitions, as we seek to transform the economics of online grocery and expand into the wider automated storage and retrieval solutions market.

“At a group level, I am pleased to see the operational and financial discipline delivered by all our teams as we focus on driving cost efficiencies and cash flow improvement. For these reasons, we look forward to delivering the full potential of the business and continuing to create lasting value for all our stakeholders.”