Ocado has reported gross sales up 19.5% to £444.6m in the 36 weeks to August 7, but warned that investment in customer service means full year margins are likely to be slightly lower than expected.

Gross sales were up 16.9% to £147.9m for the 12 weeks to August 7.

It said capacity constraints continued at its Hatfield customer fulfilment centre.

The etail grocer said average orders per week for the 12 weeks were 110,945, up from 92,834 in the equivalent period in 2010. Average order size was down slightly to £111.08 from £113.59.

During the third quarter, Ocado has worked to upgrade its Hatfield DC and improve peak capacity. This is ongoing and it has a target of peak capacity at 140,000 orders per week. It said work on the second CFC continues to progress on time.

In the third quarter it invested in customer service to return it to previous levels after it dipped slightly in its first half. Items delivered as ordered are now up to 99% and deliveries on time or early were at 95.5%. Ocado said this investment will lead to a slightly lower than expected increase in full year margins.

In the fourth quarter it will roll out the Ocado Saving Pass, offering discounts of at least 10% off standard Ocado retail prices across a range of 500 products in return for a small annual fee.

Ocado is targeting higher growth rates in the remaining weeks of the year, dependent on continued capacity expansion at CFC1 and consumer confidence.

Chief executive Tim Steiner said: “In spite of the tough economic environment, our sales are growing substantially and we remain focused on improving range, value and service for our customers. We are continuing to expand the capacity of our first fulfilment centre in Hatfield, with significant progress made over the summer months. While conducting these works, we have invested additional resources in improving our key customer performance metrics and we are pleased that these efforts are paying off.”