Ocado tumbles as shoppers put less in their baskets

Ocado's shares fell sharply today as the online retailer admitted that shoppers are spending less each shop, despite the impact of rising inflation.

The group also warned that fine-tuning its new automated distribution centre in Andover will lead to a rise in some short-term costs.

Shares slumped more than 6% to 283.4p in response.

That was despite Ocado reporting that sales have outpaced the rest of the online grocery industry.

Revenues for the 13 weeks to August 27 were up 14.3% to £344.5 million, driven by a 16% rise in average orders per week to 254,000.

This was offset by the latest fall in average order size, by 1.2% to £106.25.

Ocado finance chief Duncan Tatton-Brown claimed the smaller baskets were in fact a sign of increased loyalty, particularly among the third of customers who regularly use its Smart Pass scheme.

Increased smartphone usage also means customers are buying less but more frequently, he said.

Tatton-Brown remains relaxed about the potential impact on the company from tightening consumer confidence.

He said: “The biggest factor that influences us is what we are doing. We are talking about groceries, we are not talking about discretionary purchases.”

Ocado, which has a distribution agreement with Morrisons, offered no further detail on its international tie-up with an unnamed retailer.