Ocado (LON: OCDO) shares tumbled at the open Tuesday after it said orders edged higher in the fourth quarter, but the average basket value fell as the cost of living crisis impacted the retailer.
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The Ocado share price is currently down more than 6% at around 755p, but it initially fell to 717.8p on the news.
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The company stated that Q4 retail revenue came in at £549.4 million, up 0.3% versus the same quarter last year, with average orders per week of 382,000, up 1.9% year-on-year. However, that was offset by offset by “reducing frequency in customer shopping compared with the pandemic period and as customers respond to the cost-of-living crisis,” the company said.
In addition, the average basket value of £117 represented a 1.3% decline year-on-year.
For FY22, Ocado's full-year revenue of £2.2 billion was down 3.8% from the prior year.
Average orders per week in FY22 rose 5.8%, reflecting an increase in active customers, and full-year average selling prices increased by 4.4%. However, the company said an unwind of pandemic shopping behaviours, accelerated by the cost of living crisis, resulted in basket volumes being -12.1% lower. In addition, the declining shopping frequency helped to drive an overall year-on-year revenue decline.
Even so, the company said it has started FY23 strongly with record Christmas sales, up 15% over the five days before Christmas, and orders up 13%, which includes the highest order level recorded in a single day by the company — more than 72,000.
Looking forward, Ocado said it sees positive and improving revenue growth as it progresses through the year but believes EBITDA will be negative in the first half and positive in the second half, reflecting trends in volume growth.
The online grocer expects full-year revenue growth in 2023 to be in the mid-single digits, with a marginally positive EBITDA.
While the company acknowledged that the current market is challenging, it said in the medium term, it remains confident. It sees robust customer acquisition and continued improvements to underlying productivity, helping sales and EBITDA margin to recover strongly.
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