Ocado posted a stable Q4 trading statement in January, and its upcoming full-year results will be eagerly watched by investors on Tuesday as inflation continues to weigh on consumer spending power.

Ocado shares have been fairly lacklustre this year, despite a significant rise across the UK retail stocks. So, what can investors expect ahead of Ocado’s results?

In the online grocers’ prior statement, retail revenue grew just 0.3% and average orders gained 1.9% in Q4. However, the average basket value fell 1.3% YoY, weighed down by an 8.3% fall in average items per basket and emphasising the problems Ocado faces as UK shoppers battle the cost-of-living crisis.

Ocado stated that headwinds related to inflationary costs, capacity investments to support future growth and higher marketing costs were all continuing to impact profitability. EBITDA is expected to be close to break even for the full year.

As a result of a high inflationary environment, Ocado faces a big issue moving forward. In January 2023, the firm was ranked the second most expensive supermarket by Which, and with shoppers continuing to cut costs where possible, Ocado risks losing a proportion of customers.

However, Ocado said in its Q4 trading statement that its active customer base grew 12.9% year on year to 940,000 at the year-end, impressive given the challenging macro environment.

Based on Ocado’s Twitter mentions, the last two months have seen little signs of positivity when it comes to demand. After a spike in mentions over January, numbers have begun to edge lower in February.

Elsewhere, consumer sentiment (where we assess social media chatter and the latest news) for Ocado is leaning negative.

The company faced a considerable number of complaints about its delivery drivers and its packaging quality. Given the expensive nature of Ocado’s basket, and the fact it is navigating a difficult macroeconomic environment, we lean negative ahead of Ocado’s latest release.

By Jamel Boughedda