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Ocado hit by shrinking basket sizes

by LLB Editor
17th Jan 23 10:24 am

A 2023 recovery in the shares of online groceries firm Ocado was snuffed out after the company reported sales growth which was dwarfed by inflation and by the performance of traditional supermarkets and offered an uninspiring forecast for the rest of the year.

While Ocado is winning new customers, people are buying less. This has an outsized impact on online deliveries which cost roughly the same to make whether the order is two potatoes and a block of cheese or a full weekly shop.

AJ Bell’s Russ Mould said: “Even with tiered charging based on how much you order, shrinking basket sizes are still likely to have a material impact on margins. Ocado is also at a premium price point which isn’t exactly aligned to the pressures on household budgets in the UK.

“Pointing to a strong rebound in 2024 requires investors to take a lot on trust and it doesn’t look like the market is willing to extend Ocado this courtesy.

“It doesn’t help that the long-term growth story at Ocado isn’t exactly capturing the imagination either. While there has been a trickle of new licensing deals for its Ocado Smart Platform, an out-of-the-box online groceries solution for global groceries firms, there hasn’t been the flood of agreements that might have been hoped for in the wake of the pandemic.”

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