Ocado sales rise as price cuts win back shoppers

Online grocer Ocado has reported a pick-up in retail sales growth as it tempts back shoppers amid a turnaround and moves to cut prices.

The group posted a 7.2% rise in sales to £569.6 million at its retail business, which is run as a joint venture with Marks & Spencer, over the three months to August 27, up from 5% growth in the first half.

It cheered a return to growth in the number of items sold in the last month of the quarter, as it revealed a 1.5% year-on-year increase in active customers to 961,000.

Ocado also saw a 1.9% rise in average orders per week to 381,000.

The group had recently made a series of price cuts across hundreds of items to win back shoppers hit hard by the cost-of-living crisis.

Prices rose by 8.4% on average across its products in the quarter – the same level as in the previous six months – but Ocado said this still remained “considerably” below wider UK grocery inflation.

Industry figures from Kantar last week showed UK grocery market inflation easing back to 12.2% in the four weeks to September 3 – the lowest level for more than a year.

Ocado stuck by its guidance to swing to a full-year profit, with “marginally positive” underlying earnings.

But the update comes as it looks to boost trade at Ocado retail, having posted underlying losses of £2.5 million across the group in the six months to May 28.

M&S chairman Archie Norman told shareholders in July that he was “not happy” with Ocado Retail’s performance and that there was “work to do” with the joint venture.

Ocado boss Tim Steiner admitted that the group is “not where we wanted it to be four years ago” on unveiling half-year figures.

Ocado Retail chief executive Hannah Gibson said: “It has now been a year since I joined Ocado Retail and in January we set out our Perfect Execution strategy, making sure every element of our customer proposition and our operating model is at its best.

“We are delivering on this plan and have great momentum in the business, with revenue growing faster in the third quarter than in the first half and a return to positive volume growth in the last month of the quarter.

“The continued progress in the third quarter underpins our confidence in delivering our 2022-23 guidance of mid single-digit revenue growth and full year profitability, and we have started the final quarter positively.”

She added: “We are making good progress, but we want to go even further.”