Ocado dives £500m into the red: ‘Truly dismal’ results rattle investors

Ocado losses reached half a billion pounds as customers added fewer items to their online shopping baskets in the face of the rising cost of living.

In an update labeled “really dismal” by analysts, the online supermarket reported a loss of £500.8 million for 2022, while revenues remained steady at £2.5 billion.

That was on top of a loss of £177 million a year earlier and sent shares down a further 12 per cent.

The stock is now down more than 80 percent since peaking in 2020 amid a pandemic-fueled boom in online shopping.

Ocado revealed that chief executive Tim Steiner received £2 million last year and also said the value of his share holdings fell by £231 million to just under £130 million over the 12-month period.

Sales at its grocery arm Ocado Retail – a 50:50 joint venture with Marks & Spencer – fell 3.8 per cent to £2.2 billion last year as price-conscious shoppers reined in their spending.

Business was also hit as shoppers returned to cafes, restaurants and brick-and-mortar supermarkets following the end of lockdown restrictions.

As competition between the supermarkets heated up, Ocado launched a new price war in which he promised to match prices with the more than 10,000 products sold by Tesco.

Steiner – whose £2m salary last year was only a fraction of the £59m he received in 2019 – stressed that ‘every company has had its business model tested by a combination of macroeconomic and geopolitical headwinds’ over the past year .

“We have more confidence in our model than ever before,” he added. But Clive Black, an analyst at Shore Capital and broker at M&S, said the results were “really bleak,” adding: “One can’t yet see the rainbow, let alone a pot of gold.”

With a drop in sales at its supermarket division, Ocado posted a loss of £4 million, a dramatic decline in fortunes with a profit of just over £150 million in 2021.

Crunch time: Turnover at its grocery arm Ocado Retail – a 50:50 joint venture with Marks & Spencer – fell 3.8% to £2.2bn last year as cost-conscious customers cut spending

Steiner said the company was hit by “higher costs and smaller baskets” as well as a “Covid withdrawal.” Ocado’s well-to-do shoppers have their wallets tightened amid eye-watering increases in energy and food bills over the past year.

A typical basket size fell from 52 in 2021 to 46 items in 2022, with the average spend falling from £118 to £129.

This is despite a 13 percent increase in active customers to 940,000, while weekly orders averaged 377,000, up from 357,000 in 2021.

In addition to its grocery business, Ocado owns technology and robotics platform arms and sells automated warehouse technology to companies around the world.

Within this side of the business, the International Solutions section experienced another year of heavy losses.

And while the UK Solutions and Logistics division made a profit of £67.2m, this was slightly down from £68.5m in 2021.

Russ Mould, investment director at AJ Bell, said the retail joint venture with M&S “appears to be mired” and “the long-suffering shareholders are running out of patience.” Shares fell 12.2 percent, or 76 pence, to 548.8 pence.