Shares in online supermarket Ocado have dropped by as much as 12 per cent since it has announced profits for the financial year are set to be lower than expected.
The delivery business, which sells mostly Waitrose groceries, said earnings before income tax, depreciation and amortisation are expected to be £27.5 million to £28.5m.
This is lower than has been predicted. For example, the average estimate from 10 analysts working for Bloomberg was £34.2m.
Ocado has said “production issues” due to “capacity constraints” at its Hatfield Customer Fulfilment Centre (CFC) have hit profits. It was forced to hire extra staff to maintain customer service levels during work to install extra capacity. It is building a second CFC in Warwickshire, which is said to be on time and on budget.
Tim Steiner, Chief Executive Officer of Ocado, has said: “We are encouraged by the operational capacity improvements that we have made, but are disappointed that we did not achieve as large or as early an increase as we had originally planned. There is more work to be done and we are focused on delivering capacity and sales growth in the first half of 2012.”
Despite the problems, deliveries peaked at 131,381 orders in the last week of the financial year.
The update on trading to November 27, ahead of Ocado’s announcement of full year results on 31 January 2012, also said sales have grown approximately £643 for the full financial year.
This will be 16.7 per cent growth on the £551.1m it made in 2010.
The business has faced new challenges this year with Waitrose announcing a marketing push to promote its home delivery service within the M25 in direct competition with Ocado.
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