Ocado lowers outlook as customers cut back
Despite a ‘record’ number of new customers who are now shopping at Ocado, the value of the average basket was down by 6% to £116 in Q3, with a greater decline experienced later in the quarter during the peak summer holiday season
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Ocado Retail Ltd has lowered its outlook for FY22 as revenue growth in Q4 is not expected to generate full-year growth year-on-year as customers are buying smaller baskets and trading down in response to inflationary pressures.
The group now expects to see a small sales decline in FY22 and close to break-even EBITDA as customers are seeking value-for-money items. The value of the average basket was down by 6% from £123 to £116 in the 13 weeks to 28 August 2022 (Q3).
Meanwhile, Ocado has reported a 2.7% increase in Q3 sales of £532m, compared with £517.5m in the same quarter last year, and up 42% on pre-Covid levels.
The group has also seen a “record” number of new customers who are now shopping at Ocado. Active customer numbers grew 23% year-on-year to 946,000, driving an increase in average orders per week of 10.7%
However, Ocado said that cost headwinds (predominantly energy and dry ice) are likely to weigh on profitability in Q4.
Tim Steiner, chairman of Ocado Retail, said: “We remain focussed 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.”
He added: “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.”
