Ocado losses swell as shoppers add less items to their baskets amid cost of living crunch

Ocado has posted swelling losses after shoppers have added less items to their shopping baskets following the cost of living crunch and easing of lockdown restrictions.

Losses widened to £211m, from £27.9m the year prior, for the six month period to 29 May, as customers tightened their purse strings as inflation surged past new 40-year highs.

Shares in the middle-class favourite had plunged by three per cent on Thursday, with its price down some 59 per cent in the past year.

Group revenue tumbled four per cent to £1.3bn, while revenue from its retail business fell eight per cent to £1.1bn as economic turmoil caused shoppers to shrink their shopping baskets.

Bosses at the online grocer said they are now anticipating low single digit growth in its retail division.

Strong growth in its logistics and technology solutions division were offset by a drop in groceries revenue.

The results follow the departure of Ocado Retail top dog Melanie Smith earlier this week, with the CEO leaving the joint venture owned with M&S.

Active customers ballooned to 867,000, an increase of 12 per cent on the year before.

Its customer base was nine per cent higher than its pre-Covid peak, representing evidence of continued demand for online grocery, the firm said.

Shoppers spent an average of £120 per basket in the period, compared to £138 in the same period in 2021, driven by customers adding fewer items to their shops.

While the average selling price had lifted three per cent, this only partially offset shoppers’ reduced baskets.

However, the FTSE retailer has higher hopes for its solutions and logistics businesses, which is forecast to see EBITDA increase by 50 per cent.

The firm was at a “major crossroads”, Fraser Thorne, chief executive at Edison Group said yesterday.

“Is it a tech company or a retailer? Unfortunately, both are loss-making and neither are in vogue with investors,” he added.

The group’s structure was “starting to act as a restraint as it clouds the outlook by layering on different scenarios,” Thorne explained.

Analysts have said there could be a strong case for separating the firm into two independent entities in order to “provide investors with greater clarity and act as a catalyst for value creation,” Thorne noted.

CEO Tim Steiner said: “Following our recent successful financing, we now have a strong financial position and ample liquidity to fund the requirements of our existing and expected customer commitments into the mid-term. No additional group financing will be needed as the business becomes cash flow positive.

“With these building blocks in place, notwithstanding the near-term challenges for the consumer in the UK, we look forward to the future with confidence.”