I'm happy to say that over the last 12 months, we've made real sustainable progress and are seeing notable improvements in almost every KPI. This has been achieved by relentless focus on our priorities throughout the year, most importantly, by investing in value, delivering great choice and service. Underpinning these initiatives has also been improved cost efficiencies, such as increasing marketing efficiency and continuing to roll out our latest generation of robotic Customer Fulfillment Centers. The Perfect Execution program, introduced a year ago, has set a high bar for our performance, and it's really pleasing that we've finished the year with strong momentum, getting back to growth and profitability and having recorded our biggest Christmas ever.
Let me share with you some of the highlights from the Q4 numbers, which cover the three months to the end of November 2023, and give you a little color on Christmas trading, which falls at the end of the first month of Q1 2024. Most importantly, in Q4, sales growth accelerated. Q4 revenue grew 10.9% in the quarter, the fourth consecutive period of quarter-on-quarter growth, and a significant increase versus the 7.2% we reported in Q3. Volumes grew consistently over the period, up 4.8% year-on-year. We're continuing to attract new customers and win market share. Average orders per week were up 6.3% year-on-year to 407,000, while active customers reached 998,000 at the end of Q4, up 5.9%.
We saw our biggest Christmas ever with both metrics, which the number of items sold up 3% and sales overall up 7% in the peak Christmas period between the 20th and 24th of December. We sold over 90% of peak Christmas lots released the 22nd to 24th of December by mid-October, showing a strong customer demand. It was pleasing to see the ramp up of capacity in our new robotic CFCs, such as Luton , which went from go live to close to full capacity within three months of opening. Looking forward, we're confident the business will continue this momentum over the coming year, growing sales volumes ahead of the market. We expect sustained volume growth in FY 2024 and continued strong trends in both customer acquisitions and customer transactions. Revenue growth is likely to be impacted by lower growth in average selling price, as we...
A lso as we invest in value and as improved food price inflation continues to subside. Therefore, we expect overall revenue growth in FY 2024 is expected to be in the mid-high single digits. This year, we're expecting further progress on increasing efficiencies and demonstrating operational leverage while continuing on our journey towards our target of high mid-single digit EBITDA margin in the midterm. First and foremost, Ocado is about being a really great shopkeeper with an unbeatable range, great value, and an unrivaled experience, both online and to customers' homes. Over the next 12 to 18 months, we'll be embedding the foundations we've laid this year and raising the bar again for what it means to shop online.
Before I go, I'd just like to take this opportunity to thank the great team at Ocado Retail, M&S, and Ocado Group for their focus and dedication to improving the customer experience and giving us a really strong platform to build on in 2024. Let's go to questions.
Thank you. Ladies and gentlemen, if you would like to ask a question or make a contribution on today's call, please signal by pressing star one on your telephone keypad. That is star one for your questions today. Our first question today comes from William Woods from Bernstein. Please go ahead.
Good morning. Happy New Year. I'd just like to pick up on the EBITDA guidance. What is the rationale behind giving the kind of quite soft and quite vague EBITDA guidance for FY 2024? What are you worried about? Thanks.
Thanks, William. T his year, I talked about returning to positive EBITDA this year, and obviously that's been a combination of factors. First, in terms of growth, volume growth, we've seen improve the position. We've also shifted capacity and our network to improve on that. Then lastly, we've just been focused more broadly on, you know, improving efficiencies across all items of the P&L, whether that be marketing or overheads. Now, clearly, the key going forward is around volume growth, and as we said, we expect next year to be similar to the exit trajectory of FY 2023, and so we're expecting volume growth to continue into next year. The reason for not being more specific on EBITDA is actually quite simply that this is a trading update. We're talking about revenue.
We're actually going to come back to being specific on the FY 2023 EBITDA outcome at the end of February at the Ocado Group results, and we will also talk there more about the FY 2024 guidance going forward as well.
Got you. Thank you. J ust to follow up, in terms of your capacity utilization, it looks pretty good getting up to around that 75% number. Where would you be... where would you be looking to get to with capacity utilization? And as a follow-on, how does robotic arms change that number as you introduce them into the warehouses? Thanks.
Sure. L et's just unpick that a little bit. If we think about capacity, we've obviously made changes to our network this year, both in terms of closing Hatfield, opening Luton. We're not planning any more changes to the overall network at this point at all. And so we expect that overall, you know, the denominator, as it were, from the capacity perspective to continue. Actually, then, in terms of filling that capacity, well, it's purely just linked to volume growth. O bviously, looking forward to next year, as I just outlined in my first answer, we're expecting volume growth to continue, and obviously the trajectory of that will inform what our overall utilization is. Looking further out, though, we actually expect that there is further opportunity to probably get a little bit more capacity out of those sites.
But the focus for the next year or two years, as we grow onward robotic picking, is more about productivity rather than necessarily capacity. And we've talked about Luton going from a 200 DPH to closer to a 300 UPH pick across the network. Does that help, William?
Yeah, that's perfect. Thank you very much.
Thank you. We're moving on to a question from Andrew Gwynn from BNP Paribas Exane. Please go ahead.
Hey, good morning. Happy new year. Two questions, if I can. F irstly, just actually following on from that comment, Hannah. So you've mentioned obviously, the capacity or the opportunity to sort of sweat more capacity out of existing facilities. H ow much more headroom is, you think about sort of putting more robotics in? I think obviously the utilization is based on the sort of CFCs as they are today, but obviously there's options to add in further modules. So give us a little bit idea on the headroom. Long question, but hopefully straightforward. The second one, Christmas trading. Personally, myself, I was a little bit underwhelmed by it. O bviously you saw improved momentum in Q4. It's normally a period where you're supply constrained rather than demand constrained, yet growth is a little bit subdued.
Just a thought on that would be much appreciated. Thank you.
Thank you. Y es, moving to your first question on CFC opportunities for pressing further, that we believe there's opportunity to do more at the sites. We haven't been specific on that yet, and we're gonna continue to kind of understand what that looks like, but we do know that site's been operating very well. The UPH, the productivity, whether it comes to pick or amount, has been strong, and so we'll be continuing to look at that. Obviously, across the broader design of a CFC, there's multiple elements to it, and you need to be able to optimize across all those elements. I t's something we'll be looking at. It's not something we'll be updating on, I expect, in the near term. On your second point on Christmas trading, it's a great question.
I think to some extent it's why we, we call out that actually we had a record-breaking, you know, Christmas. It was the biggest Christmas we've ever had. We saw high demand. You know, we, we sold out 90% of slots we released by mid-October. I think that there's an adversity that actually we, we could always do more at Christmas, and I think we had a lot of network shift, in earlier in Q4. We're closing Hatfield, opening other sites. We ramped those sites incredibly quickly, and I think what we saw was a strong result year on year. But it's, it's a, it's a, it's a different time of year for us, and actually we're a 100- we're a 365 day business, and we're talking now about four days, of the year.
And just from that, is it fair to conclude that when you were planning for Christmas, it was maybe just a bit too cautious? And you know, you've not put enough manpower in or enough vans, and actually it could have been better if you wanted?
I think there's always a point for our Christmas trading, you know. There's always going to be more demand in the last two weeks than we can serve, and I think that it's always a period where we could possibly do more, but I wouldn't say it gives you necessarily much, much to guide in terms of outlook. I think the Q4 view is more reflective of our overall trading performance.
Very clear. Thank you very much.
Thank you.
Thank you, and up next, we have Luke Holbrook from Morgan Stanley. Please go ahead.
Yeah, good morning, everyone. Just firstly, on Zoom sites, I'd just be eager to hear an update on where we are on deployment of Zooms as of today and into 2024, just so we get an idea of contribution of overall top line revenue growth from those sites. T hen secondly, on the M&S side, if you could just update us on those negotiations you're having. I guess firstly, with the possible kind of Hatfield CFC and some of the equipment still there, and that fee that's paid from the joint venture to the group. And then secondly, can you just confirm on the contingent payments, whether that is still under negotiations or whether it is not being paid? Thank you.
Oh, on the second one first, Luke, actually, it's relatively straightforward in terms of that's actually a question for Ocado Group at M&S. This is a Ocado Retail trading call, so that's something that we picked up in the Ocado Group results in FY 2024, should you wish to ask the question then. So end of February, so I would say. T hen your first question in terms of Zoom. So as you would have seen, we've announced that we are focused on growing Zoom in London. We recently closed our Leeds site, and we're focusing on how to optimize the London locations. We've seen strong growth over the course of this year, and we're continuing to focus on, you know, new opportunities as and when the right locations come up. But we've seen, you know, continued strong growth in those sites.
We've seen strong customer NPS, and we're continuing to expand that business.
Okay. J ust in terms of number of Zooms that you're expecting by the end of 2024?
We haven't been specific on giving guidance on that at this stage. Sometimes it will depend on kind of property, et cetera, which can be a little hard to be predictive about.
Okay, understood. And so that means you're on the negotiation with the M&S side, you're under... Still negotiating with them. I'm a bit confused on why you can't comment today on that.
Well, that's... Sorry, to be clear, that's a conversation between Ocado Group and M&S. As Ocado Retail, we are not part of those negotiations.
Okay. Understood. Thank you.
Thank you. As a brief reminder, that is star one for your questions today. We now take a question from James Sherwin-Smith from Peel Hunt. Please go ahead.
Jessica, good morning. Thank you for taking my question. I just wanted to ask a question about total addressable markets. Historically, and I guess currently still, Ocado.com and M&S are upper tier supermarkets. But you've also been increasing your prices slower than inflation, which means you are moving, perhaps slowly, but moving closer towards being addressable by more customers. I guess I wanted to think, firstly, how do you think about your total addressable active customer base on a social economic basis against that 1 million you've talked about today? S econdly, how should we think about how that total addressable customer base could continue upwards over time as you, you're able to position yourself better on price, as you move towards being more profitable again?
Great question. Thank you, James. I f I think about it, I think there's a number of different consumer segments for us to go after. I think, you know, clearly most adjacent to the current customer base, are those who are existing online shoppers and actually being able to win share from those, which, you know, you know what the total size of the market is there. I think, you know, what we're focused on is offering a proposition which is materially better due to our operating model, whether it be greater choice, whether it be better service... but also in, in terms, in terms of, value as well, and I'll come back to that in a second. Once you focus on that, there's then a question again about, well, then what about those who are currently prefer in-store, the in-store model?
A ctually, again, when we talk to customers who are not currently shopping online, what do they say? Well, they say that they prefer products that are fresher, and they don't like getting substitutions from online. Well, actually again, the model that we've got allows product to be delivered fresher, because they're not hanging around the store, and we have the lowest level of subs in the market. Over 99% of items are delivered in full and on time. A ctually, you know, we have a model which allows to break down those barriers as well. And then in terms of overall value, what's quite interesting at the moment is when we look at our switching data, we do see switching from a wide variety of other players, but we are not seeing it just from one end of the end of the market.
We see it from a broader viewpoint. And why is that? Well, actually, we have a very broad range, about 50,000 items, that allows us to play at multiple different tiers. W e've got Ocado own brands, we've got, you know, nappies there, which are the same price as Aldi. We've got juice, we've got crumpet, the basics that you can buy entry tier, as well as being able to trade up into, other, you know, smaller niche suppliers, as well as getting fantastic M&S products as well. W e do see a wide variety of consumers, shopping with us, and we expect that to continue.
May I just ask, may I just ask a follow-up on the perception? Because obviously you said when you talk to people that prefer in-store, you know, that you mentioned we like things that are fresher, lower subs, all of those types of things. I guess that's, that's been what you've been good at for a number of years. I'm wondering why... is that basically a marketing effort that needs to be done to, to, to remind people that of that fact?
I think there's, I think a couple of things on that. I think the first is around ... Actually, some people still haven't tried Ocado, so it's actually enabling them to try Ocado, getting them through that first journey, and then absolutely, as you say, around education as well. It's something that we will be focused on this year, too.
That's great. Thank you.
Thank you.
Thank you. And our next question comes from Emily Johnson from Barclays. Please go ahead.
Morning. The first question I had was, can you just talk a bit about the active customer growth in Q4? How much do you think that exit rate is representative of what you can do in FY 2024? I guess a second part to that question, which is a bit more detailed within that. Do you think those new customers are kind of brand new online customers? Do you think you're taking market share from any other retailers in, or in specific parts of the country? I s there anything notable in terms of the, any kind of compare and contrast between those new customers' spending behavior versus your existing ones?
For example, can you see any tangible link to those customers being, having a higher share of their basket towards your kind of value-based items or towards M&S products now that you've increased the product range there? And a final part to what's a kind of another linked question. How do you think about investing in pricing versus marketing next year to drive that active customer growth? S should we expect any increase in investment into either of those elements year on year? Thanks.
Thank you, Emily. Lots to unpack there. I f we talk about customer growth to start with, let's just maybe unpack it through, you know, various stages of the funnel. I f we think about new customers coming in, we're expecting, you know, that's been actually pretty consistent and healthy. We've been really focused on making sure we're optimizing the various channels that we recruit from. So expect that to continue, it's been pretty steady through the second half of last year. Y ou know, expect continued momentum on that. The big shift that we enabled last year was in terms of retention for fifth, then. O nce you've got customers in the door, are they sticking with you? Are they staying?
We saw our retention for fifth increase a lot from FY 2022 into FY 2023, by focusing on that new customer journey as well as overall proposition. We expect that's reached a good strong statement on this, expecting another step up, but we are expecting kind of, again, continued momentum into FY 2024 at the same level we did in FY 2023. And then when you kind of ask the question, "Well, what is the quality of those customers?" We're definitely seeing an improvement in the quality of the customers we're bringing in, i.e., kind of the lifetime value, early indicators that we have of them, in FY 2024, going forward based on what we've seen in FY 2023. So we're not giving that to improve, but we know it did improve from FY 2022 into 2023.
We're expecting that to continue. Now, if you look at our base more broadly, you know, are they ... You know, what, who are those customers coming in? you know, we can see that they are ... What we see over time, is that while customers join us, they might have a slightly smaller basket, shop less frequently. Over time, they will shop more frequently, they will grow their basket with us as they explore more of the range. S o our early indicators is that is positive. Inevitably, if you track out over a very long period, we'll be saying that clearly the larger you grow, the more of a diverse base you have, and clearly that has some impact. But actually, we're pretty happy with where we're at in terms of those customers that are joining us.
As I just said to James earlier, we see that kind of from a broad base of other retailers that we're getting that switching from. M&S products are definitely part of the range, but I'd say probably pretty similar issue, you know, representation for existing customers as well. And s we've said, you know, that's been going well this year to increase the range of M&S products, so M&S customers can find all they want online. I think your last question then was investing in pricing versus marketing. Actually, we have improved our marketing efficiency from FY 2022 to FY 2023, and have, you know, got more customers coming in, more sticking with us, but actually reduced our spend on marketing as a percentage of sales.
We think that's a broadly healthy position that we were in last year and expect to continue on that trajectory next year as well. In terms of price, obviously, we are working with our suppliers to figure out all the efficiencies we can make to pass on any improved value onto our consumers. I hope that gives you just a bit of flavor of what we're focused on.
Thank you. As there are currently no further questions in the queue, I'd like to hand the call back over to you, Hannah, for any additional or closing remarks.
Thank you, everyone. T hat concludes this call. We will give you an update from an Ocado Retail perspective on sales with our Q1 trading statement on the twenty-sixth of March. W e'll see you then. Many thanks.
Thank you for joining today's call, ladies and gentlemen. You may now disconnect.