Ocado slumps as its margins are squeezed

ONLINE grocer Ocado said yesterday that sales growth slowed in the third quarter and full-year profit margins were likely to be lower than expected as the company ploughed cash back into the company.

The company, whose stock floated at 180p in July 2010, said growth was held back by capacity constraints.

Ocado said gross sales rose 16.9 per cent to £148m in the 12 weeks to 7 August – down from a 17.2 per cent lift in the second quarter.

It blamed the slower growth on its the lack of capacity at its Hatfield customer services processing centre, which is to receive an £80m revamp.

Ocado chief finance officer Andrew Bracey said: “We have a strong business but are giving a cautious outlook.” Meanwhile, chairman Michael Grade bought 83,000 shares in the company yesterday.

Ocado’s shares tumbled 11.44 per cent yesterday.