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Ocado Group sees growth curbed by shortage of delivery drivers

U.K. online grocer Ocado Group plc said its growth in the 14 weeks ended Dec. 3 had been curbed by a shortage of drivers to deliver customers' orders.

Growth had been restricted by a shortage of capacity, "with the lack of drivers in certain locations being the largest factor," CEO Tim Steiner said in a Dec. 14 trading statement.

The Hatfield, England-based company reported that revenue during the period had increased 11.6% year over year to £373.8 million from £334.8 million a year ago.

Independent retail analyst Nick Bubb wrote in a Dec. 14 research note that Ocado's "growth isn't too bad, but it is below the usual +14%/15% run-rate."

Ocado, which does not operate any retail stores and makes deliveries from its warehouses, has struggled to recruit delivery drivers in southeast England amid tight labor markets. The unemployment rate in the U.K. in the three months to October was 4.3%, the lowest level since 1975, according to the Office for National Statistics.

The company has been forced to raise rates of pay to stimulate interest in its vacancies and has tried to speed up its recruitment process.

Ocado employs about 5,500 drivers. Comparative figures were unavailable.

Steiner said the problem had been addressed. "While this driver shortage has now been largely resolved, there was some short-term impact on average orders per week over the period," he said. Ocado fulfilled an average of 280,000 orders per week during the 14-week period, up 11.1% from 252,000 a year ago, it said.

Ocado plans to open a new customer fulfillment center in Erith, southeast London, in 2018. At scale, the site, which would be Ocado's fourth, will be able to process 200,000 orders a week.

In midafternoon trading, Ocado's shares were up 9.30 pence, or 2.7%, at 350.90 pence, giving it a market value of £2.21 billion. Its shares have jumped about 40% since late November when it announced Groupe Casino had signed an agreement for Ocado to develop an end-to-end grocery delivery service for the French retailer.