Ocado says it has returned to annual earnings after strong sales growth

16 January 2024 , 11:14

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Ocado says it has returned to annual earnings after strong sales growth (Image: PA Media)

Online supermarket Ocado has announced a return to annual earnings, seeing a leap in sales towards the end of the year.

The retail section of Ocado Group, operated jointly with Marks & Spencer, disclosed a 10.9% sales increase to £609.4million in the three months leading up to November 26, a rise from 7.2% growth in the previous quarter. Ocado affirmed it would meet its predicted return to earnings for the full year ending November 26, following a strong fourth-quarter performance which saw a 7% overall rise in annual sales.

The company had been seeking to enhance trading after suffering a half-year loss of £2.5million, by trimming its own costs and implementing price reductions across hundreds of items to attract shoppers affected by the ongoing cost-of-living crisis. The firm stated: "Our trading performance, and our focus on costs, has translated through to our bottom line, returning to positive EBITDA for the full year."

It also mentioned achieving record Christmas trade, outside its yearly cycle, with Ocado Retail reaching its apex level of sales, enjoying a 7% boost between December 20 and 24. Average prices increased by 5.4% year-on-year across products in the three months leading up to November 26, which was revealed to be below inflation in the broader market.

This figure displayed a notable drop from observed 8.4% price inflation from the prior quarter. Ocado Retail saw a 4.8% rise in sales volume in its fourth quarter, but basket sizes dropped by 1.6% due to cost-of-living pressures and changing shopping habits post-pandemic.

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Hannah Gibson, the chief executive of Ocado Retail, said they made "significant progress in 2023" and were "pleased to have finished the year with strong momentum". For the upcoming financial year, Ocado Retail predicts revenue growth in the "mid-high single digits", but further gains may be limited by efforts to keep prices low.

The company stated: "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."

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Lawrence Matheson