Yahoo Finance Ocado raises prices as sales slow
Online supermarket Ocado (OCDO.L) has increased some retail prices to reflect the rising costs faced by the grocery industry across the UK.
Ocado said it had "moved certain retail prices", where increased costs could not be mitigated, in line with the rest of the market.
The grocer said significant increases in raw materials and product cost prices, as well as in the prices for energy, utilities and dry ice, added further cost headwinds for the grocery industry.
Read more: UK shop prices rise at highest rate since 2011
"Ocado Retail has been working closely with suppliers where appropriate to actively manage this level of inflation. The business has moved certain retail prices, where costs could not be mitigated, in line with the rest of the market and will continue to monitor the market to ensure alignment on prices and delivery of fair value to customers," said Ocado.
Looking ahead, Ocado said the scale of food price inflation, coupled with the overall level of market demand as the cost of living increases, is "difficult to predict".
The group said its caution reflected uncertainties over inflation, which have increased significantly in recent weeks due to the war in Ukraine, the overall level of market demand, and the continued return to pre-COVID shopping patterns.
Industry data published earlier this month showed shop price annual inflation accelerated to 1.8% in February, the highest rate since November 2011
Read more: Ocado losses triple as cost of robotic warehouses roll-out bites
The group said retail revenues dropped 5.7% to £564.7m ($744m) in the first quarter amid a “softening” market overall.
Rising food prices coupled with shifting shopper habits since COVID restrictions have eased, means that Ocado now expects annual retail revenue growth “closer to 10%”. Just last month it was forecasting growth in the “mid-teens”.
The grocer’s active customer numbers grew 31% year-on-year to 835,000. Those who remain are also spending less.
Ocado said its average basket size came in at £124, around 15% lower than last year. Average orders per week rose 12% to 367,500.
Ocado has taken the wooden spoon in the FTSE 100 as investors react to the slashed sales outlook.
Ocado boss Melanie Smith said :”The last quarter has been encouraging for Ocado Retail despite the clearly evident challenges the industry and consumers are facing.
“Of course, as we have seen since the end of COVID restrictions, the value of the average basket and shape of the week continue to normalise as we return towards the rhythm of our pre-COVID lives.”
