Cost of living crisis hits Ocado’s revenue and profit outlook

• 15 September 2022
• Transport / Logistics Services

UK online grocery chain Ocado Retail has downgraded its 2022 outlook due to the cost of living crisis.

Saying that customers are buying fewer items and choosing cheaper goods, it says that annual sales will be lower than last year. With revenues lower, its operating profit will be close to break even. Far higher energy costs will hit profits amongst other issues.

Ocado saw strong sales in the third quarter with sales up by 2.7% to £532 million due to record numbers of new shoppers coming to the company. Its number of active customers climbed by 23% to 946,000 in the year to date, driving an increase in average orders per week of 10.7%.

However, the online grocer pointed out that customers are ordering smaller baskets and seeking value-for-money items. This dropped the average basket value down by 6% 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.”