Ocado shares are down more than 13% in early Tuesday trading after the company posted a trading statement for its third quarter.
The grocery delivery and technology business told investors that it experienced strong customer growth, but the cost of living crisis is weighing on consumer spending.
The value of the average basket was down by 6% in the period, to £116, due to inflation-related pressures on consumer spending.
“The impact of energy prices and other inflationary pressures has led to customers trading down and putting fewer items in their basket as they manage total cash spend,” said Tim Steiner, Chairman of Ocado Retail.
“In addition to trading down, customers are adding fewer items to their baskets. Average eaches (individual stocking keeping units) per basket during the quarter was 45, down 10% compared with the same quarter last year, and now in line with pre-pandemic shopping patterns,” he added. “While ASP was up 5%, lower eaches in the basket, down 10%, resulted in a 6% decline in the value of the average basket, from £123 to £116. This was offset by a 10.7% growth in customer transactions, resulting in sales growth in the period of 2.7%.”
Ocado reported sales of £532 million, up 2.7% YoY, and said it expects stronger growth in the fourth quarter. Meanwhile, active customer numbers grew 23% year-on-year to 946,000, driving an increase in average orders per week of 10.7%.
However, the company expects cost headwinds (predominantly energy and dry ice) to weigh on profitability in the fourth quarter, while lower consumer spending means it sees a small sales decline in FY22 and close to break-even EBITDA.