Ocado Retail, the UK online grocery joint venture between Ocado Group PLC (LSE:OCDO) and Marks and Spencer Group PLC (LSE:MKS), was not expected to blow the socks off shareholders with today’s full-year trading statement.
A trade down among inflation-hit customers resulted in a slew of profit warnings throughout 2022, with the group forecasting a year-on-year sales decline and a “close to break-even” for underlying profits (EBITDA).
So it comes as little surprise to see full-year revenues down 3.8% to £2.2bn from 2021 despite average orders per week increasing as well as total active customers.
This increased customer count was offset by average basket values declining 1.3% to £117. Ocado also noted that its average price inflation of 7.9% was the lowest among all major supermarkets.
Ocado's active customer base was up 12.9% year on year, to 940,000 at the year-end, evidencing strong customer demand for the service and value offered by Ocado.
Ocado’s next-generation customer fulfillment centres (CFC) continue to grow productivity, with Andover and Purfleet consistently achieving over 200 units picked per labour hour (UPH) within the facility, and Andover achieving a peak of 220 UPH, compared to UPH of around 150 for Ocado’s first-gen CFC in Hatfield.
Chief executive Hannah Gibson said: “The year ahead will set us up to deliver strong sales and profit growth over the mid-term. In 2023 we will continue to strengthen and improve our leading customer proposition, including investing in value to help customers manage cost of living pressures, while keeping tight control of our costs.
“We will also be doing much more to unlock the potential of our partners, combining the benefits of Ocado's technology with the magic of M&S products. While the current market environment is challenging for everyone, I am very excited in the future for Ocado Retail.”
Looking into 2023, Ocado expects EBITDA to be negative in the first half and positive in the second half with strong margin recovery.
At the time of writing, London-listed Ocado Group PLC (LSE:OCDO) (OCDO) shares were down 10% to 727p with a £6bn market capitalisation.