# Ocado Retail cuts outlook as Britons tighten belts
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-09-13
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Ocado Retail Downgrades Full-Year Outlook Amid Cost of
Meta Description: British online supermarket Ocado Retail downgrades outlook, customers navigating cost of living crisis by buying cheaper items, expects sales decline and
URL: https://financedigest.com/ocado-retail-cuts-outlook-as-britons-tighten-beltshtml

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By James Davey

LONDON (Reuters) -British online supermarket Ocado Retail downgraded its full-year outlook on Tuesday, saying customers are trying to navigate the cost of living crisis by buying fewer products and trading down to cheaper items.

The business, a 50:50 joint venture between Ocado Group and Marks & Spencer, said it now expects a small sales decline over the full 2022 year and core earnings close to break-even. It previously forecast revenue growth and [profit margin](https://www.financedigest.com/inflation-boosts-jeronimo-martins-q4-profit-but-dents-margins.html "Inflation boosts Jeronimo Martins’ Q4 profit but dents margins") in low single-digit percentages.

[Shares in Ocado Group](https://www.financedigest.com/saipem-shares-drop-group-says-cannot-explain-why.html "Saipem shares drop, group says cannot explain why") were down 9% at 0709 GMT, while M&S was down 3%.

Britons are looking to [save money](https://www.financedigest.com/how-to-save-money-for-a-car.html "How to save money for a car") in the face of soaring inflation, which hit 10.1% in July.

Last week industry data showed the slowest growth in retail sales since the end of COVID-19 lockdowns last year, while UK fashion retailers Primark and ASOS both [warned on profit](https://www.financedigest.com/bootmaker-dr-martens-warns-on-profit-as-finance-chief-walks.html "Bootmaker Dr Martens warns on profit as finance chief walks").

However, economists [say Britain’s](https://www.financedigest.com/britain-sets-5g-goal-says-no-magic-number-of-operators.html "Britain sets 5G goal, says no ‘magic number’ of operators") inflation rate looks likely to slow after new Prime Minister Liz Truss announced a plan to cap surging household energy prices.

Ocado Retail said its [third quarter](https://www.financedigest.com/greek-residential-property-price-recovery-picks-up-in-third-quarter.html "Greek residential property price recovery picks up in third quarter") to Aug. 28 sales rose 2.7% to 532 million pounds ($622.4 million), improving from a decline in the previous three months, and it forecast stronger growth in the [fourth quarter](https://www.financedigest.com/german-gdp-contracted-by-0-4-in-the-fourth-quarter.html "German GDP contracted by 0.4% in the fourth quarter").

Customer numbers are up 23% over the last year to 946,000, it said, driving a 10.7% [increase in average](https://www.financedigest.com/taylor-wimpey-espana-remain-cautiously-optimistic-as-average-selling-price-increases-by-20-4.html "Taylor Wimpey España ‘remain cautiously optimistic’ as average selling price increases by 20.4%") orders per week.

Its average basket size, however, was down 6% at 116 pounds as shoppers sought [savings in the face](https://www.financedigest.com/under-saved-and-underprepared-women-face-challenges-saving-for-retirement.html "UNDER-SAVED AND UNDERPREPARED: WOMEN FACE CHALLENGES SAVING FOR RETIREMENT") of inflationary pressures.

Ocado [Retail also said that higher costs](https://www.financedigest.com/amazon-other-retailers-revamp-free-shipping-as-costs-soar.html "Amazon, other retailers revamp ‘free’ shipping as costs soar"), predominantly for energy and dry ice, would weigh on profitability in the fourth quarter.

As consumer spending stabilises, we expect Ocado Retail will again deliver attractive and accelerating growth in [sales and a strong](https://www.financedigest.com/indias-tata-motors-jumps-to-a-7-month-high-on-strong-q4-jlr-sales.html "India’s Tata Motors jumps to a 7-month high on strong Q4 JLR sales") recovery in profitability,” said Chairman Tim Steiner.

Separately on Tuesday, industry [data showed German-owned discounter Aldi has overtaken Morrisons to become Britain’s](https://www.financedigest.com/britain-plans-new-data-rules-to-ease-compliance-burden.html "Britain plans new data rules to ease compliance burden") fourth-biggest supermarket group by value market share.

($1 = 0.8547 pounds)

(Reporting by James DaveyEditing by Elizabeth Piper, David Goodman and Louise Heavens)


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