Ocado Group PLC (LSE:OCDO) will, on this coming Tuesday 17 January, deliver an update for its UK online grocery joint venture with Marks and Spencer Group PLC (LSE:MKS).
This update, which some thought might come before Christmas, comes on the back of three (or maybe four) profit warnings last year.
A third-quarter statement in four months ago warned that revenues were likely to show a small decline for the full year as the consumer squeeze was leading customers to trade down and put fewer items in their baskets, with underlying profits (EBITDA) “close to break-even".
“Ocado Retail is facing challenges," said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown ahead of the January update.
The swapping of shopping items for cheaper alternatives is a trend she expects to have continued in the final quarter and maybe over the important festive season.
“Last we heard, the average basket value was down 6% because of people buying fewer items. With inflation still running rampant this is unlikely to have reversed. This is troubling because the group’s grappling with enormous energy costs so lower basket values limit Ocado’s ability to help offset this."
The latest outlook from the company was “sensible" she added, “but a worse-than-expected outlook could upend things”.
Shares in Ocado are down by almost 50% over the past year and three-quarters from their all-time high of autumn 2020, while M&S is down 34%, with both having rallied from lows in mid-October.
For Ocado alone, City analysts are expecting an EBITDA loss of £47mln for the whole year to November, against £61mln a year ago. On a reported basis, the consensus is for a hefty loss of £425mln against a £177 million deficit a year ago.
In its Ocado Retail updates the company does not normally talk about its Ocado Solutions technology business, but there may be mentions of the rollout of micro-sites to support Ocado Zoom, the planned one-hour delivery service in the UK.
Similarly, there could be more details on ongoing capacity expansions in the UK, designed to take total Ocado Retail deliveries to 600,000 a week from the third-quarter’s 374,000.
Less likely is talk about the Ocado Smart Platform, where eight of eleven overseas partners are now live and 16 of 58 contractually committed customer fulfilment centres, or CFCs, are open.