Ocado cites warehouse capacity problems for profit fall

Hatfield, Hertfordshire, UK:  Sales at grocery home delivery company Ocado are being held back by capacity constraints at its automated warehouse in Hatfield, Hertfordshire, said Andrew Bracey, chief financial officer, Ocado.

It is spending £85m on improving the site and increasing capacity.  The first phase of investment, which is expected to be finished by the end of November, will enable it to handle up to 140,000 orders a week, up from about 110,000 today.

Ocado blames poor performance on constraints at its automated warehouse in Hatfield

A second phase, which will take another year, will enable it to process an additional 40,000 orders, taking the total to 180,000.

Ocado is also investing £210m in a second distribution centre, which will open in Warwickshire at the end of 2012.

Shares in Ocado tumbled 11% on Monday on news of reduced profits.  Bracey investment in the 12 weeks to 7 August returned customer service to its “previous high levels” but came at a price as it was “likely to lead to a slightly lower than expected increase in full-year margins”.

Sales were up 16.9% at £148.9m in the 12 weeks to 7 August, a figure that was short of the 17.2% in the second quarter and disappointed some analysts who had anticipated a pick-up.  The shares closed down 15.3p at 118.4p.

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