Ocado Retail sees revenues rise despite 'challenging' backdrop

Ocado Retail reported a rise in first-quarter revenues on Tuesday despite a fall in basket sizes, and said it remained on track to return to sales growth and profitability.

The online grocer - a 50:50 joint venture between Ocado Group and Marks & Spencer Group - said retail revenues rose 3.4% in the 13 weeks to 26 February to £583.7m, with average orders per week ahead 3.6% year-on-year at 381,000.

The average basket size fell by 7.5% to 45 items, however, although that was offset by an 8.3% rise in the average selling price to £2.75. The average basket value nudged up marginally, by 0.2% to £124.

Hannah Gibson, chief executive, said: "While the trading environment remains challenging, we expect to build momentum through the second half of the year, as we improve our proposition, grow our customer base and no longer lap Covid shopping behaviours.

"This solid 2023 performance will enable us to return to sales and profitability."

Ocado is forecasting mid-single digit growth this year, as it returns to volume growth, with marginally positive earnings before interest, tax, depreciation and amortisation. EBITDA is forecast to be negative in the first half and positive in the second.

In February, Ocado Group - which as well as the joint venture with M&S provides solutions and logistics services for other retailers - posted flat revenues for the year to November end, at £2.5bn, while losses widened significantly to £500.8m.