There was further misery for Ocado’s share price yesterday after the online grocer admitted it needed additional labour to cope with the Christmas rush.
Shares in Ocado fell 17 per cent to close at 59.2p, now more than 60 per cent lower than the flotation value in July 2010, after it said production problems at its distribution centre in Hatfield, Hertfordshire, would hit full-year profits.
The group was forced to hire more staff to maintain deliveries while work to boost capacity at the centre was completed, but reassured that additional labour should be phased out.
Ocado said underlying earnings would as a result be between £27.5m and £28.5m for the year to November, which is below City forecasts and previous expectations.
However, Ocado reported a stronger trading performance after a 16.7 per cent increase in gross sales to £643m and high service levels, with 98.3 per cent of items delivered exactly as ordered and 92.3 per cent of orders on time or early. The City had forecast full-year earnings of £34m, compared to £22.1m last year.
Rod Salmon, an analyst at Numis, said the costs were “one-off” and will fall away next year.