Ocado slipped to an annual loss of £501m after a “challenging year” for the online grocer as retail revenues fell amid a cost-of-living crisis, with customers putting less in their baskets and using more discount coupons.
Revenue at Ocado Retail, its joint venture with Marks & Spencer, fell 3.8% in 2022, despite the company reporting record Christmas sales. Ocado group pre-tax losses widened to £500.8m from £176.9m in 2021. Analysts had forecast an annual loss of £399m.
Customers ordered fewer items in each store than in 2021, when Ocado benefited from increased demand for grocery deliveries during the pandemic. They have also used more discount coupons. The average basket size fell to 46 items in 2022 from 52 in 2021, raising the average value to £118 from £129.
Shares in Ocado fell 9.5% in early trading on Tuesday.
As fuel and food prices have soared around the world, Ocado has been battling higher cost inflation than food suppliers and increased its average selling price by 4.5% last year to £2.55 per item from 2, £44.
“Over the past year every company has had its business model tested by a combination of macroeconomic and geopolitical headwinds,” said Ocado chief executive Tim Steiner.
“Ocado Retail has shown its resilience in a context of higher costs and smaller baskets, reflecting the easing of Covid and the cost of living crisis in the UK, growing customer numbers and growing online market share.”
The number of active customers rose 13% to 940,000 and Ocado’s share of the online grocery market has risen to 12.3% from 11.7% in 2021, according to Nielsen data. Orders each week averaged 377,000 compared to 357,000 in 2021.
Retail revenue fell 8.3% in the first half of the year, followed by a 1.4% increase in the second half as volumes began to trend towards a more regular basket size.
Total group revenue was flat at £2.5bn last year. Ocado has developed automated warehouses where robots move in grids picking and packing groceries and is selling its warehouse technology around the world. It made 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 U.S.: nine full-size automated warehouses and three smaller Zoom locations for its express delivery service.