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(Alliance News) - Ocado Group PLC on Wednesday said it now expects just "low single digit" annual sales growth from its retail joint-venture, as grocery buying behaviour normalises and consumer confidence weakens.
The Hatfield, Hertfordshire-based online grocer warned the Ocado Retail joint-venture, operated alongside Marks & Spencer Group PLC, has suffered in recent weeks as its trading environment has "deteriorated".
Annual growth at the JV will now be "in the low single digits", the forecast lowered from a 10% climb. Ocado ends its financial year around late November.
There will be a "low single digit" earnings before interest, tax, depreciation and amortisation margin.
"Since Ocado Retail's Q1 trading update on March 17, the trading environment has deteriorated, as has been widely reported in industry data, with the cost of living crisis compounding the impact of a return to more normal consumer behaviours as restrictions have ended and many people return to the office," Ocado explained.
The group said the grocery market has declined by 4-5% in the last few months compared to last year, when the country was experiencing peak Covid-19 restrictions.
Online grocery overall has declined by around 20% compared with last year, although the online market remains 60-70% higher compared with two years ago.
Ocado also said that food price inflation in the average basket is trending in the low single digits.
Over the week beginning May 9, Ocado Retail delivered 400,000 orders to customers for the first time, the company noted. It continues to see big pools of demand in the UK market for online grocery services which, with new capacity coming on stream.
Ocado shares were down 4.5% at 730.40 pence each on Wednesday morning in London.
By Xindi Wei; xindiwei@alliancenews.com
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