Ocado sticks by earnings outlook as retail sales rise

But with price inflation stripped out, sales by volume are still falling, with customers also buying less per shop as they return to pre-Covid shopping habits.

It said average basket sizes fell 7.5 per cent to 45 items, offset by an 8.3 per cent surge in average selling prices amid surging food inflation, leaving the overall basket value flat.

The group added that order frequency has returned to levels seen before the pandemic struck.

Average orders per week at Ocado.com lifted 3.6 per cent to 381,000.

Ocado stuck to its full-year guidance, reiterating that it expects the retail business to remain loss-making in its first half, but hopes to swing out of the red by the year end as sales growth recovers, leaving it with marginal underlying earnings growth for the full year.

Ocado Retail chief executive Hannah Gibson said: “While the trading environment remains challenging, we expect to build momentum through the second half of the year.

“This solid 2023 performance will enable us to return to sales growth and profitability.”

The group is forecasting mid-single digit retail sales growth over the full year, “reflecting a return to volume growth as the challenging comparison to larger volume basket shopping behaviours that remained in early 2022 fades”.

Ocado revealed last month that losses widened across the wider group to £501m in 2022 from £177m in 2021, with its retail business swinging to an underlying loss of £4m.

It was hit by a cutback in customer spending per shop as well as soaring cost pressures, which took their toll on its bottom line.

But it said in its latest update that more customers are shopping with the group, with a 13.8 per cent increase in active customers to 951,000 at the end of its first quarter.

Richard Hunter, Head of Markets at interactive investor, commented: “Ocado does not immediately register as a discount name and, in the current environment where a cost of living crisis is seeing many search solely for value, there has been an impact.

"In addition, food inflation is currently running at around 18 per cent, while energy costs and labour shortages remain something of a drag on the sector. While it is evident that customers are still coming to Ocado, it tends to be more selective. Average basket values are largely flat and the average basket size has fallen by 7.5 per cent, partly driven by the so-called “Covid unwind” as shopping habits continue to normalise.”