Delivery pioneer lacks capacity to grow

Elizabeth Fournier
EIGHTEEN months post float, and those distinctive delivery vans just aren’t looking so special anymore.

Yesterday’s profit warning from chief executive Tim Steiner may have been expected at some point, but analysts clearly thought the company had some breathing room – now it’s going to be more under scrutiny than ever.

And it’s not as if Ocado shares – which have already plummeted more than 60 per cent since January and fell another 16 per cent yesterday – needed any more downward pressure.

Though management seem confident that problems with the group’s Hatfield distribution centre are close to being resolved, the cost pressures they’ve highlighted mean the assertion that plans for a second centre in Warwickshire are “on time and on budget” may fall on unsympathetic ears.

Any outgoings are going to be under the spotlight, given that sales are up but missing consensus targets by as much as £5m on some estimates. The last thing Ocado needs now is the introduction of financial pressures to add to its operational woes.

It may not be a takeover target just yet (although rumours will always rear their head until Marks & Spencer or Morrisons enter the online delivery market), but the fact is that Ocado just doesn’t stand out from the crowd anymore.

With competition getting tougher and a gloomy outlook for retailers, that might not be something Ocado has the capacity to change.