Ocado has cautioned that costs will rise in its current financial year as it presses ahead with plans to grow its new Andover warehouse.
The online grocer’s finance boss Duncan Tatton-Brown said capital expenditure would be “a couple of million pounds” more than previously expected as it invests in the customer fulfilment centre.
The site in Andover is Ocado’s third warehouse and the first to include its Ocado Smart Platform technology, which the business plans to sell to international retail partners.
Speaking after unveiling a 13.1% rise in retail sales to £312.7m in the 13 weeks to August 27, Tatton-Brown said: “The facility is scaling week-by-week and we are pleased with the progress that we’ve made.
“As we made clear before, because it’s a new design, our priority has been to make sure it’s reliability and resilience are as high as possible, and doing so will incur a couple of million pounds in extra costs this year.”
“Andover is a revolutionary new facility and an important source of new capacity to support our continued strong revenue growth.”
Tatton-Brown said the extra investment was not related to the capital costs of running the facility, but would pay for the additional software and engineers required to scale the centre’s operations.
Asked if investors and analysts had anticipated the rising costs or whether they would be adjusting earnings forecasts, Tatton-Brown said: “I’m sure people will be digesting the statement and there may well be some moves by some of the analysts, so we’ll see what happens.”
Ocado’s current full-year EBITDA consensus stands at around £92.5m, but some analysts had predicted a figure closer to £94m.