Ocado forecasts return to FY positive core earnings as sales rise

Online grocer Ocado Retail has forecast a return to positive earnings for 2022/23 year as the fourth-quarter revenues rose by almost 11%.

"Our trading performance, and our focus on costs, has translated through to our bottom line, returning to positive EBITDA for the full year," the company said on Tuesday.

Retail revenue rose 10.9% to £609.4m, while active customers were up 5.9% to 998,000 and average basket value increased 3.8% to £120.62.

The equal joint venture between Ocado Group and retailer Marks & Spencer, added that Christmas sales hit a record level on the back of a 7% rise in sales between December 20 – 24.

For 2023/24 year, it forecast revenue growth in the "mid-high single digits".

AJ Bell investment director Russ Mould said: “Online groceries are here to stay. However, whether or not the service can be as profitable as it was during the pandemic is open to question."

"The economics of delivering a weekly shop to someone’s door are highly dependent on the amount they’re ordering as the costs of doing so don’t really fluctuate too much. Although minimum basket sizes can be implemented, with smaller orders incurring more onerous fees."

“It’s significant that basket sizes by number of items were pretty much static, even if the value ticked up."

Reporting by Frank Prenesti for Sharecast.com