Ocado warns of sales fall despite third quarter uplift
Ocado retail has seen its third quarter sales rise by 2.7% to £532 million after it benefited from record numbers of new shoppers.
The uplift was a significant improvement on the second quarter decline and the retailer is expecting to achieve even stronger growth in its fourth quarter.
Ocado’s number of active customer numbers climbed by 23% year-on-year to 946,000, which drove an increase in average orders per week of 10.7%
However, the retailer said customers are shopping smaller baskets and seeking value-for-money items in response to the cost-of-living crisis. This meant the value of the average basket was down by 6% in the period to £116.
Tim Steiner, chairman of Ocado Retail, said: “We remain focused on providing Ocado Retail customers with the best possible value to help them navigate the cost-of-living crisis, and are encouraged by the positive underlying trends in the business which underline the value of Ocado’s differentiated proposition to customers.
“As we have seen in Q3, customer numbers are sharply up as consumers either switch from other providers or try online grocery for the first time; underlying productivity in fulfilment and the last mile continues to improve; and the new CEO of Ocado Retail, Hannah Gibson, brings fresh vision and energy to the business.
“As consumer spending stabilises, we expect Ocado Retail will again deliver attractive and accelerating growth in sales and a strong recovery in profitability.
“For all these reasons, we are optimistic for the future even while recognising the challenges that higher energy bills and other inflationary pressures are creating for our customers today.”
Ocado said cost headwinds are likely to weigh on fourth quarter profitability and that it will continue to help customers keep their food bills low by investing in price and an expansion of its own label range.
As a result, it now expects to see a small sales decline in its full year and close to break-even EBITDA.
It added: “In the medium term, Ocado is confident, in the light of strong customer acquisition and continued improvements to underlying productivity, that sales and EBITDA margin will recover strongly. This will be driven by growing customer numbers, orders, ongoing cost discipline and as we fill the available capacity.”
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