Ocado reports drop in full-year sales as more shoppers buy online but spend less, and less often, than during the Covid-19 pandemic

Image courtesy of Ocado Retail/M&S

Image courtesy of Ocado Retail/M&S

Ocado Retail today reports low growth in the fourth quarter of its year and a 3.8% fall in full-year revenues as its online grocery customers won during the Covid-19 pandemic spent less in a cost of living crisis. Sales were, however, 40% higher than in pre-pandemic 2019, and the retailer opened its current financial year with a record Christmas. 

Sales declined over the year as more shoppers signed up to the service but spent less – despite growing inflation – and less often they had during the Covid-19 pandemic – as cost of living issues hit. Ocado Retail says online grocery sales appear to be stabilising at 11% of the market – up from 6% pre-Covid – and cites analyst IGD as predicting further growth next year. 

The retailer now expects profitability to be close to break even in its latest full year. In 2023, Ocado Retail expects revenues to return to grow as it moves on from pandemic comparisons and says it is likely to report a first-half loss but a second-half profit in the coming 2023 financial year. 

Fourth quarter and full-year figures

The online grocer, a joint venture between Ocado and Marks & Spencer, says that its revenues grew by 0.3% to £549.4m in the 13 weeks to November 27 2022, compared with a year earlier as active customer numbers increased (+12.9% year-on-year to 940k) – but shoppers bought less frequently and spent less than they did during the Covid-19 pandemic. Ocado Retail delivered an average of 382k orders per week (+1.9% year-on-year (YOY)) while basket values fell to an average £117 (-1.3%).  While average product selling prices (+7.6%) grew less quickly than inflation, shoppers bought fewer items (-8.3% to 45) than they had a year earlier. 

Over the full year, revenue of £2.2bn was 3.8% lower than a year earlier, although 40% higher than before the pandemic. Again, the retailer delivered more orders in an average week (+5.8% YOY) reflecting growth in active customer numbers, while average selling prices also grew (+4.4% to £2.55) over the year. But shoppers bought fewer items, on average (-12.1%, or six items fewer) and bought less often, especially as the cost of living crisis was felt. 

All of these headwinds are expected to hit profitability over the year and Ocado Retail says it expects full-year top-line profitability – at an EBITDA (earnings before interest, tax and one-off costs) level – to be close to break even.

The retailer is also reporting record Christmas sales in the early part of the 2023 financial full year. Sales were up by 15% over the five days before Christmas and order numbers grew by 13%. Those days include the highest level of orders ever seen in a single day – at more than 72k.

Hannah Gibson, chief executive of Ocado Retail, says: “We now have close to 1m 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. We will also be doing much more to unlock the potential of our partners, combining the benefits of Ocado’s technology with the magic of M&S products.

“While the current market environment is challenging for everyone, I am very excited in the future for Ocado Retail. Building on 20 years of amazing service and innovation, we are confident of continuing to raise the bar in online grocery and working with our partners to deliver the very best experience for our growing customer base.”

Looking ahead

Ocado Retail says it now has capacity to deliver about 600k orders a week – meaning that just under two-thirds of its capacity was used in the fourth quarter of its year, when average weekly orders stood at about 382k. It expects that to be significantly boosted during 2023 as it win more customers and orders. It also expects to deliver more orders through its one-hour Zoom service, which now operates from four sites, after one opened in Leeds at the end of November. More than half of the customers who bought via Zoom in 2022 had never previously use Ocado. 

Its strategy is now to focus on a strategy of perfect execution, growing customer numbers, orders and using more of its customer fulfilment capacity 


The retailer predicts that revenues will grow as it moves beyond pandemic comparisons – with full-year growth in the mid single digits – but that EBITDA profits may be negative in the first half but move into growth in the second half. 

Ocado is ranked Top500 in RXUK Top500 research, while Marks & Spencer is ranked Leading.

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