Ocado Retail downgrades 2022 outlook despite third quarter growth

Ocado Retail has said shoppers are struggling to cope with the cost-of-living crisis prompting them to buy fewer items and trade-down to cheaper goods, and has therefore downgraded its 2022 outlook.

In a statement released today [Tuesday 13 September], the online supermarket said annual sales will be lower than last year as the improvement in the second half fails to offset the tough numbers seen in the first. While, Ebitda (Earnings Before Interest, Taxes, Depreciation, and Amortisation) will be ‘close to break-even’ as it deals with higher costs, particularly for the likes of energy.

This follows strong sales in the third quarter, Ocado reported sales rise by 2.7% to £532m, as it benefited from record numbers of new shoppers. 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%.

Even in this successful quarter, the grocery home delivery firm saw the cost-of-living crisis affecting buying decisions. It said customers are shopping smaller baskets and seeking value-for-money items. 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.”

The retailer expects such challenges to weigh on fourth quarter profitability but it will work to help customers keep their food bills low by investing in price and an expansion of its own label range.

Image Credits:
Ocado

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