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Ocado's Sales Growth Dented By Driver Shortage

Published on Dec 14 2017 9:20 AM in Technology tagged: Featured Post / Ocado / Online Grocery / Grocery delivery

Ocado's Sales Growth Dented By Driver Shortage

Ocado Group reported sales growth that fell short of analyst expectations as the UK online grocer said it was held back by a shortage of delivery drivers, in a labor market that’s been tightened by Brexit.

Gross retail sales growth slowed to 11.6% for the quarter ended 3 December, short of the consensus estimate of 12.3%. Ocado’s shares fell as much as 1.9% early Thursday in London.

The shortage of employable drivers comes amid a plunge in the number of migrant workers arriving in the UK from the European Union as the country prepares to leave the bloc.

In the tightest labor market on record, that has made it more difficult for Britain’s retailers to find the temporary workers they need during the holiday season.

“There is tightness in the labor market, particularly in the southeast of England,” around London, Ocado Chief Financial Officer Duncan Tatton-Brown said by phone.

“In certain locations we have found it more difficult to hire drivers.” The company declined to cite Brexit as a reason and said the shortage is now largely resolved.

Teething Problems

A 5 percentage point slowdown in Ocado’s order growth this quarter can’t be fully explained by a lack of delivery drivers, according to Sanford C. Bernstein analyst Bruno Monteyne.

Teething problems at the company’s automated warehouse in Andover, England, are also likely to blame, which also hurts the company’s prospects of licensing its technology to new customers, he said.

There are also signs of a slowdown in the UK’s online grocery market. Kantar Worldpanel said this week that growth in the online market slowed to 2.8% over the last 12 weeks.

Ocado’s revenue shortfall comes after the company last month announced a landmark technology licensing deal with French supermarket operator Casino , its first major client outside the UK.

Tatton-Brown said he’s confident Ocado will be able to sign more agreements in the medium-term and that the company is focusing its efforts on striking new deals in developed European markets and North America.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine. 

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