Ocado dives £500million into the red
Shares plunge again as ‘truly dismal’ results rattle investors
OCADO losses ballooned to half a billion pounds as shoppers added fewer items to their online baskets in the face of rising living costs.
In an update that analysts branded ‘truly dismal’, the online supermarket reported a loss of £500.8m for 2022 as revenues held firm at £2.5bn.
That came on top of a £177m loss a year earlier and sent shares down another 12pc.
The stock has now fallen more than 80pc since peaking in 2020 amid a pandemic-fuelled online shopping boom.
Revealing that chief executive Tim Steiner was paid £2m last year, Ocado also said the value of his shareholding fell by £231m over the 12 month period to just under £130m.
Sales at its grocery arm Ocado Retail – a 50:50 joint venture with Marks & Spencer – fell 3.8pc to £2.2bn last year as cost-conscious customers reined in spending. Business was also hit as shoppers returned to cafes, restaurants and physical supermarkets following the end of lockdown restrictions.
With competition heating up among the supermarkets, Ocado launched a fresh price war pledging to match prices against over 10,000 products sold by Tesco.
Steiner ( pictured) – whose £2m pay cheque last year was just a fraction of the £59m he got in 2019 – insisted that ‘every company has had its business model tested by a combination of macroeconomic and geopolitical headwinds’ in the past year.
‘We have more confidence in our model than ever before,’ he added. But Clive Black, an analyst at Shore Capital and house broker to M&S, said the results were ‘truly dismal’, adding: ‘One cannot yet see the rainbow, never mind any pot of gold.’
With sales at the grocery division down, Ocado racked up a loss of £4m, a dramatic decline in fortunes having made profits of just over £150m in 2021.
Steiner said the company was hit by ‘higher costs and smaller baskets’ as well as a ‘ Covid unwind’. Ocado’s well-heeled shoppers have tightened their purse strings amid eye-watering increases to energy and food bills in the last year.
A typical basket size dropped to 46 items in 2022 from 52 in 2021, with the average spent dragged down to £118 from £129.
This came despite a 13pc rise in active customers to 940,000 while weekly orders hit an average of 377,000 versus 357,000 in 2021.
As well as its grocery business, Ocado owns technology and robotics platform arms, selling automated warehouse tech to firms across the world. Within this side of the business, the International Solutions section saw another year of heavy losses. And while its UK Solutions and Logistics division did make a profit of £67.2m, this had dipped slightly from £68.5m in 2021.
Russ Mould, investment director at AJ Bell, said the retail joint venture with M&S ‘looks stuck in the mud’ and that ‘patience is wearing thin for the long-suffering shareholders’. Shares fell 12.2pc, or 76p, to 548.8p.