Ocado has slumped to a £501m annual loss after a “challenging year” for the online grocer, as retail revenues fell amid the cost of living crisis, with customers putting less in their baskets and using more discount vouchers.
Revenues at Ocado Retail, its joint venture with Marks & Spencer, fell by 3.8% in 2022, despite the company reporting record sales over Christmas. The Ocado group’s pre-tax loss widened to £500.8m from £176.9m in 2021. Analysts had forecast an annual loss of £399m.
Customers ordered fewer items in each shop than in 2021, when Ocado benefited from booming demand for grocery deliveries during the pandemic. They have also been using more discount vouchers. The average basket size fell to 46 items in 2022 from 52 in 2021, taking the average value to £118 from £129.
Shares in Ocado fell by 9.5% at the start of trading on Tuesday.
As fuel and food prices have surged around the world, Ocado has been grappling with higher cost inflation from food suppliers, and raised its average selling price by 4.5% last year, to £2.55 an item from £2.44.
“Over the last year every company has had its business model tested by a combination of macro-economic and geopolitical headwinds,” the Ocado chief executive, Tim Steiner, said.
“Ocado Retail has shown its resilience against a backdrop of higher costs and smaller baskets, reflecting the Covid unwind and the UK cost of living crisis, by growing customer numbers and increasing online market share.”
Active customer numbers increased 13% to 940,000 and Ocado’s share of the online grocery market has grown to 12.3% from 11.7% in 2021, according to Nielsen figures. Orders each week averaged 377,000 compared with 357,000 in 2021.
Retail revenues declined by 8.3% in the first half of the year, followed by growth of 1.4% in the second half as volumes started to trend towards a more normal basket size.
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Overall group revenues were flat at £2.5bn last year. Ocado has developed automated warehouses where robots move around grids picking and packing groceries, and sells its warehouse technology around the world. It struck two new international partnerships last year, with Lotte Shopping in South Korea and Auchan Polska in Poland, to jointly build warehouses.
The company opened 12 sites for its partners, which include Kroger in the US: nine full-size automated warehouses and three smaller Zoom sites for its rapid delivery service.
