Driver shortages hit sales growth at online grocer Ocado

Driver shortages hit sales growth at online grocer Ocado
FILE PHOTO: A worker packs bags as a conveyer belt transports goods inside the Ocado Customer Fulfilment Centre in Hatfield on the outskirts of London, Britain, April 6, 2016 . REUTERS/Dylan Martinez/File Photo
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LONDON (Reuters) – British online grocer Ocado suffered a slow down in retail sales growth in its latest quarter, hurt by a shortage of drivers which it said was affecting the wider industry.

Ocado, which last month secured its biggest overseas deal so far – a partnership with French supermarket Groupe Casino – said that in certain parts of London and south east England it had found it difficult to recruit enough drivers and had had to offer higher wage rates.

“A shortage of capacity, with the lack of drivers in certain locations being the largest factor, restricted our sales growth,” said Chief Executive Tim Steiner.

“While this driver shortage has now been largely resolved, there was some short term impact on average orders per week over the period.”

Shares in Ocado were down 0.5 percent at 0817 GMT.

Ocado employs about 12,000 people, half of them drivers.

The firm said its retail sales rose 11.6 percent to 373.8 million pounds in the 14 weeks to Dec. 3, its fiscal fourth quarter, having increased 13.1 percent in the previous quarter.

Average orders per week increased 11.1 percent to 280,000 and average order size rose 0.3 percent to 106.1 pounds.

Chief Financial Officer Duncan Tatton-Brown said the sales increase would have been “closer to 13 percent” if the firm had not experienced the driver shortage.

“I don’t think this is a unique problem (to Ocado),” he told Reuters.

“It’s pretty clear that employment levels in London and the south east…are pretty high and there’s a lot of growth in e-commerce and delivery generally.”

Prior to Thursday’s update, analysts average forecast for 2016-17 earnings before interest, tax, depreciation and amortisation (EBITDA) was 90.6 million pounds, up from 84.3 million pounds made in 2015-16, according to a consensus compiled by the company.

Tatton-Brown said he did not expect “material” moves to the analysts’ consensus.

Shares in Ocado, which have had a roller coaster ride since listing at 180 pence in 2010, have risen 29 percent so far this year.

(Reporting by James Davey; editing by Kate Holton)

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