Revenue fell 4% during the period after the company was hit by a sharp drop in demand at its online joint venture with supermarket chain Marks and Spencer (MKS.L).
The Ocado Retail venture saw a £72.8m reduction in earnings before interest, tax, depreciation and amortisation (EBITDA) due to an 8% fall in sales and cost inflation, while retail revenues declined by 8% to £1.1bn, missing expectations of £2.3bn.
As inflation continues to rise and incomes are squeezed, consumers tighten their purse strings, with the average basket size down 13% to £120 compared to the year before.
“For years, Ocado was the UK stock that most resembled a Silicon Valley start-up: fast-growing, with bags of potential and world-leading technology. But it feels as though progress has stalled,” Adam Vettese, analyst at social investing network Adam Vettese, said.
“Ocado’s half-year results show that either consumers’ appetite for online grocery shopping has dimmed, or the online supermarket has failed to capitalise on the trend. In reality, it’s probably a bit of both.
“The firm hasn’t been helped by the cost of living crisis, which is causing households to spend less on groceries, but with revenue falling in the first six months of the year, and low single-digit growth predicted for the rest of the year, it’s hard to argue that Ocado is still a growth stock.”
It comes after the company already slashed its forecast twice this year, and on Wednesday announced the departure of chief executive Melanie Smith.
She is set to leave the business at the end of next month. Deputy CEO Lawrence Hene will take over as interim boss in September until a permanent successor can be found.
However, the group still reiterated its revenue forecast for at least £6.3bn for the year, as well as £750m in profits.
It also expects full-year capital expenditure of £800m as it rolls out its warehouse technology with grocery partners around the world.
The group as a whole remained committed to delivering expansion, with capital expenditure over the period increasing by 48% to £367m.
Shares fell as much as 4.5% to the bottom of the FTSE 100 (^FTSE) after opening, before later recovering slightly to trade 1.6% lower.
The stock is more than 50% lower year-to-date, compared to a gain of 3.8% for the wider FTSE 100.
Alex Smith, global sector lead at primary research firm Third Bridge, said: “With a biting cost of living crisis unfolding, Ocado’s heydays as a pandemic-era darling now feel like a distant memory.
“However, our experts expect online penetration to grow to 20% within the next five years. Ocado looks set to benefit if it can expand its capacity in good time.”