Ocado Group PLC on Tuesday said annual sales at its retail joint-venture fell, as cost of living pressure in the UK hurt grocery basket values.

The online grocer and warehouse technology firm said group revenue in the year ended November 27 amounted to £2.51 billion, up 0.6%, from £2.50 billion. Revenue fell short of consensus of £2.54 billion, however.

Ocado posted a pretax loss of £500.8 million, stretching from £176.9 million.

Retail revenue alone, dropped 3.8% to £2.20 billion. Ocado and FTSE 250-listed Marks & Spencer PLC team for the equally-owned Ocado Retail arm.

Shares in Ocado traded 9.0% lower at 568.40 pence each, the worst FTSE 100-listed performer.

‘Ocado Retail, our UK JV with M&S, has shown its resilience against a backdrop of higher costs and smaller baskets, reflecting the Covid unwind and the UK cost of living crisis,’ Ocado Chief Executive Officer Tim Steiner said.

Customer numbers increased by 13% to 940,000 from 832,000 a year earlier. There was a 5.6% increase in average orders per week to 377,000. However, average basket value fell 8.5% to £118.

Revenue at Ocado’s warehouse technology units improved. UK Solutions & Logistics yearly revenue rose 13% to £802.7 million, while at International Solutions, it more than doubled to £147.8 million from £66.6 million.

For the current financial year, Ocado expects mid-single digit growth in its retail. It is an outcome that will reflect ‘a return to volume growth as the challenging comparison to larger volume basket shopping behaviours that remained in early 2022 fades’.

It expects to be earnings before interest, tax, depreciation, and amortisation positive in Technology Solutions, and ‘marginally positive’ in Ocado Retail.

For financial 2022, it swung to a group Ebitda loss of £74.1 million, from £61.0 million profit.

Its retail Ebitda loss amounted to £4.0 million, swinging from £150.4 million profit. Its UK Solutions & Logisitcs Ebitda weakened slightly to £67.2 million from £68.5 million. At International Solutions, its Ebitda loss narrowed to £113.2 million from £119.3 million.

Ocado believes the cash and financing it currently has available ‘provides sufficient liquidity in the short to medium term’.

‘Our strong balance sheet gives us the means to finance our growth through the mid-term (4-6 years) by which time we expect Ocado Group to be cash flow positive with the cash flows from existing [customer fulfilment centres] sufficient to finance future investments,’ the company added.

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