Ocado Retail expects ‘mid-single digits’ sales growth for 2023

Ocado Retail said it expected sales growth in 2023 to be “mid-single digits” and profits to be “marginally positive”, with the group’s performance improving in the second half versus the first.

It is the first guidance the online supermarket, a joint venture between Ocado and Marks and Spencer, has given for 2023 after a year in which it experienced a contraction in revenue as shoppers returned to their pre-pandemic habits.

The company added that a better second half “is expected to underpin a strong recovery in 2024” and that it expects sales and margins “will recover strongly” in the medium term.

“Growing customer numbers, orders and increased utilisation of available capacity will, together, underpin a recovery to high-mid single-digit ebitda margins,” it said.

Performance in the final quarter of 2022 continued the trends evident throughout the year, with more customers driving a 1.9 per cent increase in orders, but on average 8.3 per cent fewer items in each order.

As a result, sales during the quarter were 0.3 per cent higher — well below the growth rates reported by mainstream supermarkets such as Sainsbury and Tesco.

Guidance for the year just ended remained unchanged from Ocado’s last update in September, with the company expecting a small fall in sales and “close to break-even” profitability.