By Scott Kanowsky
Investing.com -- Ocado Group PLC (LON:OCDO) slumped to a worse-than-expected annual loss, as the British group warned that its online retail joint venture faced pressure from rising living costs that led shoppers to rein in spending.
The digital grocer reported a loss before interest, taxes, depreciation and amortization of £74.1 million (£1 = $1.2035) for the 2022 financial year, down from a profit of £61.0M in 2021. Bloomberg consensus estimates had seen the loss at £59.2M.
Revenue inched up by 0.6% during the period but also missed projections, stemming in part from weakness at Ocado Retail, the company's joint venture with supermarket chain Marks & Spencer. Sales at the business slipped by 3.8% to £2.2B, although its share of the online grocery market grew slightly to 12.3% from 11.7%.
In a statement, Chief Executive Officer Tim Steiner said Ocado Retail showed resilience in a "challenging" year marked by higher input costs and a surge in U.K. inflation that led many customers to order fewer items. Demand has also started to ease following a boom in e-commerce during the pandemic, Steiner added.
"As the Covid unwind fades and customer growth continues the business will start to recover the fixed costs of recent capacity commitments," Steiner noted.
Top-line growth at Ocado Retail is expected to increase in the mid-single digits this year, with volumes projected to recover from a tough comparison caused by a spike in shopping traffic during the Omicron-impacted period of early 2022. Capital expenditures are expected to be drawn down as well to £550M, a reduction of at least £250M year-on-year.
Full-year core earnings are anticipated to be "marginally positive," remaining negative in the first half before recovering in the final six months of 2023.
Shares in Ocado slipped by more than 9% in early European trading on Tuesday.