UK's Ocado Retail keeps profit guidance after quarterly sales rise

An Ocado grocery delivery van is driven along a street in London
An Ocado grocery delivery van is driven along a street in London, Britain, March 25, 2023. REUTERS/Toby Melville
  • Q1 revenue up 3.4% year-on-year
  • Customer numbers up 13.8%, basket value flat
  • Expects 'marginally positive' full-year core earnings

LONDON, March 28 (Reuters) - British online supermarket Ocado Retail kept its financial guidance for the full year as it reported a 3.4% rise in first- quarter revenue, driven by more customers using its services.

The business, a 50/50 joint venture between Ocado Group (OCDO.L) and Marks & Spencer (MKS.L), fell to a loss in 2021-22 as even its typically more affluent shoppers felt the squeeze from higher inflation and bought fewer items when they visited its site.

But it said on Tuesday it expected its performance to improve as the 2022-23 year progresses.

"While the trading environment remains challenging, we expect to build momentum through the second half of the year, as we improve our proposition (and) grow our customer base," said CEO Hannah Gibson.

The jv said retail revenue in the 13 weeks to Feb. 26 reached 584 million pounds ($719 million), up from 565 million in the same period last year.

Average orders per week rose 3.6% to 381,000, with active customers reaching 951,000 at the end of the quarter, up 13.8% year-on-year.

It said average basket value was flat, with a 7.5% fall in the average number of items bought to 45, offset by an 8.3% rise in average selling prices.

The business maintained its financial guidance for the full year for "mid-single digit" revenue growth, with an improving trajectory during the year, and "marginally positive" core earnings or EBITDA, versus a 4 million pounds loss in 2021-2022.

It has forecast a strong recovery in 2023-2024.

Gibson said service levels were improving, with on-time delivery and order accuracy back to pre-pandemic levels, and an increased range of M&S products.

Earlier this month, Ocado Retail launched a new pricing scheme under which It compares its prices with over 10,000 like-for-like products on market leader Tesco's (TSCO.L) online site, giving customers money off their next shop if their shopping would have been cheaper at Tesco.

Last month Ocado Group, whose shares have fallen 58% over the last year, said annual losses had ballooned to 501 million pounds after it took a big accounting charge.

($1 = 0.8120 pounds)

Reporting by James Davey; Editing by Kate Holton and David Holmes

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