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Ocado Retail enjoys record Christmas sales despite cost-of-living pressures

Ocado Retail has reported record sales over Christmas but revealed that customers were shopping less and putting fewer items in their basket amid cost-of-living pressures.

The supermarket, which is a joint venture between Ocado Group and Marks & Spencer, said sales were up by 15% over the five days before Christmas.

It revealed that more than 72,000 orders were made on a single day – the highest it has ever seen.

However, Ocado said that the average value of people’s orders over the last three months of last year was £117, a drop of 1.3% compared to the same period last year.

This was because, despite inflation pushing up prices by 7.6%, its customers were putting fewer items in their baskets on average, with basket volumes falling by 8.3% year-on-year.

Ocado said this was due to “an unwind of pandemic shopping behaviours, accelerated by the onset of the cost-of-living crisis”, and because people were shopping less frequently.

As a result, the group saw its full-year revenues dip by 3.8% compared to the year before, totalling £2.2 billion.

However, compared to pre-pandemic levels in 2019, revenues surged by around 40% as the company benefited from a boom in demand for online groceries.

Ocado said its active customers grew to 940,000 by the end of the fourth quarter, up 12.9% compared to the same period last year, and with the average number of orders a week up by nearly 2% year-on-year.

Hannah Gibson, Ocado Retail’s chief executive, said: “This year we delivered our biggest ever Christmas for our customers at Ocado.

“We now have close to one million active customers, our largest ever customer base and we see huge potential to convert those who have now trialled online shopping elsewhere to become Ocado customers.

“The year ahead will set us up to deliver strong sales and profit growth over the mid-term.

“In 2023 we will continue to strengthen and improve our leading customer proposition, including investing in value to help customers manage cost-of-living pressures, while keeping tight control of our costs.

“While the current market environment is challenging for everyone, I am very excited in the future for Ocado Retail.”

Looking ahead, Ocado said that it expects to see lower basket sizes in the first half of 2023 compared to the same period last year.

It estimated that its earnings will be negative in the first half of the year but swing to being positive in the second half once order volumes return to growth.

At the end of the year, full-year revenue growth is likely to be in the mid-single digits and earnings will be “marginally positive”, the group said.