Shares in online grocer Ocado (OCDO.L) have fallen more than 10 per cent as the group warns of lower than expected full year profit growth.
 


Ocado cited investment in customer service during the third quarter for the impact on profit margins.
 

The company revealed that sales growth had slowed in the 12 weeks to 7 August, with sales up 16.9 per cent, compared with a 20.8 per cent growth rate in the previous six-month period.
 


Average order size also declined in the past three months to £111.08, down from £113.59 in the same 12-week period in 2010.
 


The delivery business is currently installing material handling equipment and software at its Hatfield site (CFC1) in order to improve capacity.
 


Ocado aims to reach a peak capacity of around 140,000 orders per week by the end of the fourth quarter. 
 


The company confirmed in its latest results that it is targeting higher growth rates in the remaining weeks of this year but added that this is dependent on continued capacity expansion at Hatfield and consumer confidence, which ‘remains fragile in the current economic environment’.
 


Andrew Bracey, chief financial officer, added, ‘At 19.5 per cent, our year to date sales growth has remained strong despite the deteriorating consumer climate in the UK.’
 


Bracey said that aiming for an increased rate of sales in the fourth quarter would, ‘require us to be resilient to any further slowdown in consumer spending, which may affect Ocado’.
 


The company’s shares were down 11.37 per cent at 118,50 pence (1146 hrs) following the announcement.