Ocado has kicked off a pricing war with Tesco after revealing it lost more than half a billion pounds as shoppers filled up their baskets with fewer items since the pandemic.
The online supermarket company has vowing to match prices with 10,000 products on Tesco’s website after its profits were squeezed amid the cost of living crisis.
Revenues from its online grocery joint venture with Marks & Spencer fell 3.8pc to £2.2bn as it blamed “the unwind of the large basket shopping behaviours of the pandemic”.
Ocado said the average number of items a customer was buying per visit to its online supermarket dropped from 52 in 2021 to 46 last year, the same amount as before Covid.
The value of the items in each shopping basket fell from £129 to £118 but, due to recent price rises, that is considerably ahead of the £106 seen before 2020.
Earnings before interest, taxes and other charges slumped to a £74.1m loss as it all said the small number of items being purchased was being affected by the cost of living crisis.
The company made an overall pre-tax loss of £500.8m, nearly tripling from a loss of £176.9m in 2021.
Chief executive Tim Steiner said: “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, by growing customer numbers and increasing online market share.
“As the Covid unwind fades and customer growth continues the business will start to recover the fixed costs of recent capacity commitments.”
Its stock has fallen 54pc in the last year and was the worst performer on the FTSE 100 in 2022. Its shares have fallen 8pc this morning to make it the worst performer on the index in early trading.
The business has had a tough ride over the past couple of years.
The company’s joint venture with Marks & Spencer failed to make the most of the opportunity in online retail during the pandemic.
Now shoppers are returning to stores and watching their spending with the UK’s cost-of-living crisis sending them to discount supermarkets like Aldi and Lidl.
The loss came despite overall revenue remaining broadly flat at £2.5bn, up just 0.6pc.
Mr Steiner said he has “more confidence… than ever before” in the company’s business model, despite facing “macro-economic and geopolitical headwinds” which have tested every company over the past year.
Ocado has increased investment in its solutions business, where the company builds automated warehouses for retailers using its robotic technology.
