Ocado sees return to annual earnings as sales leap

The online grocer said sales lifted 10.9% to £609.4 million in the three months to November 26 and cheered record Christmas trading.

Ocado said prices rose 5.4% on average year-on-year across its products in the three months to 26 November (PA Media)

Online supermarket Ocado has said it returned to annual earnings after seeing sales growth ramp up at its year end.

Ocado Group’s retail arm, which is run as a joint venture with Marks & Spencer, revealed sales lifted 10.9% to £609.4 million in the three months to November 26, up from growth of 7.2% in the previous quarter.

The firm said it would meet its forecast to return to earnings for the full year to November 26 after the fourth-quarter performance saw annual sales rise 7% overall.

The business has been looking to boost trade after slumping to a half-year loss of £2.5 million, by cutting its own costs and focusing on price reductions across hundreds of items to win back shoppers hit hard by the cost-of-living crisis.

We expect the positive trends in customer acquisition to lead to sustained volume growth in 2023-24

Hannah Gibson, Ocado

It said: “Our trading performance, and our focus on costs, has translated through to our bottom line, returning to positive EBITDA for the full year.”

The group also said it achieved record Christmas trading, which fell after its year-end, with Ocado Retail hitting its highest level of sales, with a 7% rise between December 20 and 24.

Ocado said prices rose 5.4% on average year-on-year across its products in the three months to November 26, which it said was below inflation in the wider market.

It marked a sharp fall on the 8.4% price inflation seen in the previous quarter.

Sales by volume lifted 4.8% in its fourth quarter but basket sizes continued to fall, down 1.6% in the quarter due to cost-of-living pressures and as shoppers continued to change their buying habits following the pandemic.

Hannah Gibson, Ocado Retail chief executive, said the group made “significant progress in 2023” and was “pleased to have finished the year with strong momentum”.

For the new financial year, Ocado Retail is forecasting revenues growth in the “mid-high single digits”, with further gains held back by moves to keep prices low.

It said: “We expect the positive trends in customer acquisition to lead to sustained volume growth in 2023-24.

“Revenue growth is likely to be impacted by lower growth in average selling price however, as we invest in value and as food price inflation continues to subside.”