Ocado plumbs the depths after alert
Ocado's shares sank to an all-time low after the online grocer issued a profits warning yesterday, as it continues to struggle with "capacity constraints" at its warehouse in Hertfordshire.
Its warning on margins means Ocado will not have delivered a maiden pre-tax profit for the year to the end of November, according to analysts at Oriel Securities.
The loss-making grocer also blamed tough economic conditions for a slowdown in sales growth, as consumers "buy one or two items" fewer per order.
Ocado blamed the hit to its profit margins on an additional £3m investment in labour and shipping costs to ensure it protected customer service levels in its fourth quarter to 27 November, as it added more capacity to keep up with rising orders.
As a result of lower margins and sales, Ocado expects full-year earnings before interest, taxes, depreciation, and amortization of between £27.5m and £28.5m, lower than the consensus forecast of £34.3m before yesterday's unscheduled statement.
Andrew Bracey, the finance director, said: "We are very disappointed and disappointed on behalf of our shareholders."
Shares in Ocado plummeted by 12p, or 17 per cent, to 59.2p. This means the value of Ocado has tumbled by more than two-thirds since it floated at 180p in July 2010.
It had forecast full-year sales of £655m for the year just ended, but now expects revenues of £643m. While its sales jumped 16.7 per cent over the year, this is lower than the 19.5 per cent growth in its first half.
Mr Bracey said: "We had capacity constraints continuing in the fourth quarter.
"There has been a small impact from the economy in the basket size being lower."
Jonathan Pritchard, an analyst at Oriel Securities, said: "Either capacity constraints have actually got worse, or demand has slowed up because in the fourth quarter, sales growth fell to 10 per cent."
But Mr Bracey said after the addition of extra capacity it expected its performance to "come back quite strongly in the first half of next year".
Board creates magnetic field to achieve lift
Singer says the track was 'force-fed down people's throats'
Endangered species spotted in a creek in the Qinling mountains
Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets
George Lucas criticises the major Hollywood film studios
Some experiencing postnatal depression don't realise there is a problem. What can be done?
Does Chris Grayling realise what a vague concept he is dealing with?
- 3 Drink alcohol and eat meat to improve male fertility - but cut down on coffee, studies suggest
Ukraine crisis: Donetsk 'tactical missile' explosion at factory sends blast wave across rebel-held city
Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
Banksy arrest hoax: Internet duped by fake report claiming street artist's identity has been revealed
Super-sized ships arrive in Britain: How big can they get?
Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
Amal Alamuddin calls for the return of the Elgin Marbles from Britain: 'Injustice has persisted for too long'
London bus driver 'kicks gay couple off for kissing'
Lord Freud: Tory welfare minister apologises after saying disabled people are 'not worth’ the minimum wage
iJobs Money & Business
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...
£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...
£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....
£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...