Ocado Retail’s return to double-digit growth, a “record” Christmas and – most notably – a move back into the black were all good news this week. However, its shares still came under pressure amid concerns over future earnings and prospects for the wider global business.

The retail joint venture between Ocado and M&S delivered growth of 10.9% year on year in the 13 weeks to 26 November, with revenues of £609.4m. This represented its fourth consecutive period of quarter-on-quarter growth and a significant increase against the 7.2% growth reported in its third quarter.

Ocado said volumes were back in growth, up 4.8% year on year. Average orders per week were up 6.3% to 407,000 and average customers reached 998,000 at the end of the quarter, representing growth of 5.9%.

Total average basket value was also up 3.8%, while average sales price was up 5.4% – a level it said was lower than market inflation.

Ocado celebrated its highest ever level of sales over the “record” Christmas trading period. Sales between 20 and 24 December increased 7% and volumes were up 3% – however, these growth rates were lower than the previous quarter.

Importantly, Ocado said its strong end to the year and its focus on costs had boosted the bottom line and the retail arm would return to positive EBITDA for the full year just closed.

“Despite 2023 being a year plagued by record high food inflation rates and a dramatic shift in customers trading down both in price and retailer, Ocado has weathered the storm,” Global Data noted. Peel Hunt said the “post-Covid normalisation appears to have settled and structural growth has returned to online once more”.

Despite the positive top and bottom line stories, a short-term bounce in Ocado shares on Tuesday quickly dissipated. They closed the day marginally down before losing another 6.2% on Wednesday on top of the 5.1% shed on Monday.

HSBC said the market was reacting to “uninspiring sales guidance and lack of a clear EBITDA upgrade”, pointing to the significant costs of acquiring volumes in online grocery.

The update did not contain any guidance on its global technology business with its “CFC rollout trajectory is under pressure, we believe”, added HSBC.

Shore Capital added: “As of the wider business… mystery and intrigue persists in an economic environment where the end of ZIRP (zero interest-rate policy) means that the money tree for endless speculative capital expenditure has come to an end.”

Ocado shares have lost 22% of their value in just the opening days of 2024 and are now down 41% since last summer.

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