Ocado Retail Flags FY Sales Dip Amid Inflation-Driven Decline in Order Sizes

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Ocado Retail Flags FY Sales Dip Amid Inflation-Driven Decline in Order Sizes
Credit: © Reuters.

By Scott Kanowsky 

Investing.com -- Ocado Retail has warned that it expects to report a decrease in full-year sales, as shoppers rein in spending on large quantities of groceries in response to surging prices.

In a trading statement, the firm - a joint venture between online supermarket Ocado (LON: OCDO ) and U.K. retailer Marks and Spencer (LON: MKS ) - said that fourth quarter revenue will rise in the mid-single digits but will not be strong enough to generate growth in the year to November.

Even though customers and orders have increased, the company added, consumers are choosing to keep their shopping baskets smaller and seek out low-price value items due to recent inflationary pressures.

Cost headwinds, particularly from energy and dry ice, could also lift its annual cost base by as much as £45M and weigh on profitability during the final three months of the year.

"[W]e now expect to see a small sales decline in FY22 and close to break-even EBITDA," Ocado Retail said.

London-listed shares in Ocado slumped heavily on Tuesday.

In the third quarter, sales rose to £532M, up by 2.7% compared to the same period last year and rebounding from a decline in the prior three months.

Meanwhile, active customer numbers grew by 23% annually to 946,000, driving a 10.7% uptick in average weekly orders.

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