UK online grocery firm Ocado Retail said it expected a small fall in annual sales as customers started to tighten their belts amid the cost-of-living crisis.
The supermarket, a joint venture between Ocado Group and retailer Marks & Spencer, also said it now expected close to break-even core earnings. It had previously forecast low single digit revenue growth and a low single digit profit margin.
“While customers and orders have grown, consumers are shopping smaller baskets and seeking value-for-money items as they respond to inflationary pressures,” the company said in a trading update on Tuesday.
As a result, the value of the average basket fell 6% in the 13 weeks to August 28, to £116, with a greater decline experienced later in the quarter during the peak summer holiday season, it added.
Cost headwinds (predominantly energy and dry ice) were likely to weigh on profitability in Q4.
“We continue our efforts to help our customers keep their food bills low including investment in price and expansion of the value-for-money own label range,” Ocado said.
Third-quarter sales rose 2.7% to £532m as the firm tipped “even stronger growth” in Q4. Active customer numbers grew 23% year-on-year to 946,000, driving an increase in average orders per week of 10.7%.
Reporting by Frank Prenesti at Sharecast.com
