UK online retailer Ocado saw its shares slide today (19 December) after reporting profit forecasts that were lower than analyst expectations.
Ahead of its full-year figures, which will be released at the end of January, the company announced a projected EBITDA of between GBP27.5m (US$42.6m) and GBP28.5m for the year to 27 November.
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Ocado’s EBITDA was GBP22m in the same period last year but its forecast was less than the GBP34.2m average estimate of 10 analysts compiled by Bloomberg. Shares dropped 6.81% to GBP0.66 as of 11:09 GMT.
The retailer said it was hit by capacity constraints at its Hatfield customer fulfilment centre in the fourth quarter, affecting profit margins as extra staff were brought in while operational capacity is improved. These jobs will go once the capacity improvements are complete. A spokesperson from Ocado would not comment on the number of jobs that will be shed.
Tim Steiner, Ocado’s CEO, said: “We are encouraged by the operational capacity improvements that we have made, but are disappointed that we did not achieve as large or as early an increase as we had originally planned. There is more work to be done and we are focused on delivering capacity and sales growth in the first half of 2012.”
Clive Black, an analyst at Shore Capital, said increased competition from other retailers and the “broader consumer malaise” in the UK may have added to Ocado’s capacity constraint woes.
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By GlobalData“EBITDA for the year to November 2011 is 22-23% lower than our GBP36.7m estimate,” he said.
“If we put this further downgrade into context though the performance is, to use that over-used and ambiguous term from post-match football commentaries, ‘a little more than disappointing’.”
The build for Ocado’s second customer fulfilment centre in Warwickshire remains on-time and on-budget, the company said. Capital expenditure for the financial year is expected to be between GBP125m and GBP130m, lower than anticipated.
Gross sales were up 16.7% to approximately GBP643m.
