Ocado buoyed by US court victory as sales fall due to worker shortages

Online grocer Ocado has revealed that cost pressures, driver and warehouse worker shortages and more customers heading back to offices prior to the recent Covid rule changes all contributed to falling sales.

The company, which is a joint venture with Marks & Spencer, said sales in the 13 weeks to November 28 fell 3.9% to £547.8 million, with the average basket size per customer dropping 12% to £118.

However, sales remain well above pre-pandemic levels – up 31.6% – and bosses said they are mitigating rising prices and shortages of dry ice to ensure they have the “best-ever” Christmas period.

The latest data came as the company learned overnight that it had won a court battle in the US, where it was accused of patent infringement by rival AutoStore.

A judgment handed down found that three of the four AutoStore patents are invalid and a fourth is not infringed. It means all 33 claims against Ocado have now been rejected.

On trading, the company said the latest sales data shows customers have been normalising their spending habits, including not ordering as much food due to the steady return to the office.

But an increase in customer numbers to 832,000 a week helped the average number of orders rise 9% compared with a year ago.

Overall sales were also constrained by a fire at Ocado’s distribution centre in Erith, Kent.

Looking forward, the company said it expects revenues to grow between 10% and 15% next year as new capacity is added to its network.

And bosses are hopeful that its Zoom service which delivers groceries less than an hour after an order has been placed can also deliver around £80 million in sales, with four sites expected to open.

Ocado Retail chief executive Melanie Smith said: “The investments we have made over the past year mean we have significant capacity for growth in 2022 and we will continue to invest in facilities, systems and people in the year ahead to deliver on our long-term growth potential.

“We are working hard to manage current industry challenges, and Ocado Retail has great momentum as we get ready for another record Christmas and further strong progress next year.”

The company also celebrated the US legal victory against AutoStore and said it is continuing to actively to pursue its own claims against the rival for patent infringement in both the US and Europe.

A spokesman said of the rulings: “We have consistently stated that Ocado does not infringe any valid AutoStore IP, and we are pleased that the judge has now agreed with us.

“This was a misconceived attempt by AutoStore to interfere with our business in the United States.

“We intend vigorously to continue our infringement claims against AutoStore in the United States and Europe.”

AutoStore said it intends to challenge the decision at a final determination in April next year.

Karl Johan Lier, AutoStore chief executive, said: “This initial determination, even if confirmed by the full commission, would not change our ability to conduct our business in the US or globally.

“The issues on which the Administrative Law Judge reached his preliminary finding on validity contradict the determination of the US Patent and Trademark Office, which refused to invalidate the patents at issue in this case.

“We will raise these issues with the full commission, and we will continue to defend our intellectual property”.

The company added it believes the counterclaims raised by Ocado are “without merit and intends to vigorously defend against those claims”.