Ocado revenue declines by 3.9%

Ocado Retail’s revenue dropped by nearly four per cent to £547.8 million in the final quarter of the year when compared to 2020.

But in comparison to pre-pandemic levels, retail revenue was up 31.6 per cent.

The company said that this year’s expected outturn was in line with guidance. However, it added that strong demand was offset by labour pressures and capacity constraints.

Ocado said that it expects strong, mid-teens sales growth for 2022, supported by the accelerated roll-out of new capacity.

While growth in orders was positive, this was impacted by the changing conditions in the post-lockdown UK labour market, in addition to the previously guided temporary reduction in capacity at the Erith Customer Fulfilment Centre ("CFC").

The value of the average basket fell 12 per cent to £118 as customer behaviours continued to normalise as many consumers returned to the office and spent less time at home.

Because of these trends, headline sales were down 4 per cent during the same time period, compared to last year. However, in comparison to 2019, sales were up 32 per cent.

"Over the past year our brilliant colleagues across Ocado Retail have been working to further strengthen our range and deliver more value for money to customers, as we continually refine and improve on the best customer proposition in the market,” said Melanie Smith, Ocado Retail’s chief executive. “We are delighted that M&S products now account for nearly 30 per cent of the basket - our customers clearly love the opportunity to buy M&S food online.

“The investments we have made over the past year mean we have significant capacity for growth in 2022 and we will continue to invest in facilities, systems and people in the year ahead to deliver on our long-term growth potential. We are working hard to manage current industry challenges, and Ocado Retail has great momentum as we get ready for another record Christmas and further strong progress next year."

Tim Steiner, chairman of Ocado Retail, said:"We are very encouraged by the underlying trends which are driving growth in our business. Hundreds of thousands of UK consumers have tried online grocery over the last eighteen months and the vast majority are continuing to shop online and are not going back to physical stores. These customers increasingly appreciate the customer service provided by Ocado.com and Ocado Zoom and the range of customer missions that we satisfy from the big basket to the top-up shop. We can see this in the strong growth in customer transactions at Ocado Retail over the second half of the year. At a time of growing momentum in the channel shift from physical stores to online we are bringing significantly more capacity to market and are confident that we are on a strong, long-term growth trajectory".

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