Online supermarket Ocado has had to shell out more money on delivery drivers after a shortage in the run-up to Christmas pushed up demand and wages.
Ocado said a lack of drivers in the South East and London hit sales growth in the 14 weeks to December 3.
However, it added that the issue was now mostly rectified. Half of its 12,000 staff are drivers.
Booming demand in the UK for online groceries and internet deliveries has caused a surge in demand for drivers. Many are making as much as £250 a day across the festive season, according to recruitment company Manpower.
Bonanza: Drivers can make £250 a day in the Christmas run-up
Company sales grew by 11.6 per cent, but chief financial officer Duncan Tatton-Brown said growth would have been closer to 13 per cent were it not for the hiccup.
‘I don’t think this is a unique problem to Ocado,’ he said.
‘It’s pretty clear that employment levels in London and the South East are pretty high and there’s a lot of growth in ecommerce and delivery generally.’
Tim Steiner, chief executive at Ocado, added: ‘While this driver shortage has now been largely resolved, there was some short-term impact on average orders per week over the period.’
But some commentators were unconvinced by the reasoning for the sales slowdown.
Bernstein analyst Bruno Monteyn said: ‘Management blame the slowdown largely on a lack of drivers in certain locations, but we can’t see that causing such a large drop-off in orders per week growth.’
Ocado began trading as a business partner with Waitrose in 2002, packaging and delivering the supermarket’s online orders, and in 2014 it secured a similar deal with Morrisons supermarkets.
Until last month, the shareholders had been losing patience with the company as they waited for it to fulfil plans to sell its online technology to an overseas firm.
But Ocado redeemed itself with investors after it secured a deal with French supermarket chain Groupe Casino.
It will provide Groupe Casino with the same technology used in its own warehouse in Andover, where customer orders are prepared and stock is managed using robots.
Ocado’s shares soared by more than 33 per cent following the announcement.
In order to maintain its market cap of more than £2billion, analysts said Ocado will need to secure similar deals.
Steiner said that he was confident that Ocado would be able to secure more contracts, but has remained tight-lipped on any potential partners.
George Salmon, equity analyst at Hargreaves Lansdown, said: ‘While Ocado has always been confident of getting partners to sign on the dotted line, up until recently the investment case relied more on wishful thinking than we might have liked.
‘However, the agreements with Groupe Casino and an as yet unnamed European partner have lent more substance to the story.
‘Hopefully Mr Steiner can pull more rabbits from the hat in the coming months.’
Courtesy: Daily Mail Online