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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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Shares fall at Ocado and HMV as markets disappointed by results

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Shares in both Ocado and HMV were down this morning after a day in which the two both released disappointing financial figures.

Ocado's shares were this morning trading at 57.35p, 3.13% down in this morning's trading. The shares peaked at 285p in February, after floating on the stock exchange at 167p in July 2010. Meanwhile, HMV's were down to 2.7p, a fall of more than 6.9% this morning alone and of more than 90% in its financial year to date.

Ocado saw its share price fall after warning on profits. The online grocer said in a fourth quarter trading update that sales in its full financial year to November 27 were up by 16.7% to £643m, from £551.1m at the same time last year. It said earnings before interest, tax, depreciation and amortisation would come in at between £27.5m and £28.5m, up from £22m at the same time last year.

But it also said that profits were hit by capacity constraints at its Hatfield customer fulfillment centre. Although a record 131,381 deliveries were made in the last week of the financial year, the company said it had had to take on extra staff to make sure that standards of customer service were maintained. It said that work to build a second fulfillment centre in Warwickshire was on time and on budget.

Ocado said “superior” customer service remained important, and said 98.3% of items were delivered as ordered in the full financial year, while 92.3% of orders were on time or early for one-hour delivery slots.

Tim Steiner, chief executive officer of Ocado, said: "We are encouraged by the operational capacity improvements that we have made, but are disappointed that we did not achieve as large or as early an increase as we had originally planned. There is more work to be done and we are focused on delivering capacity and sales growth in the first half of 2012."

The update came as entertainment retailer HMV said pre-tax losses, before exceptional items, had widened by 32.7% to £36.4m from losses of £27.4m at the same time last year, with sales down by 19.4% at its HMV Retail arm in the first half of its financial year. They were down by 11.9% in like-for-like terms. Total sales across the group were down by 17.6% to £364.9 thanks to the more than doubled operating profit of £3.4m turned in by HMV Live, up from £1.5m at the same time last year.

It warned that while the board was confident the group would continue operating for the foreseeable future, “the economic environment and trading circumstances create material uncertainties which may cast significant doubt on the group’s ability to continue as a going concern in the future.” It also said it was in “regular and constructive discussions” with its banks.

The company, which has been hit by the trend to buy the entertainment products it sells online, outlined a strategy of continuing to refit its stores with an extended range of products, including portable digital technology. In the stores where this strategy had already been put in place, technology sales had increased by 42%. The company said it may also sell its HMV Live division. This morning its share price stood at 2.7p, more than 90% down in the year to date.

Chief executive Simon Fox said: "This has been a challenging start to the year. However, we have taken decisive action to restructure the business and are now seeing the benefits of this, particularly in our technology products business.

“Like all consumer-facing companies we are facing tough trading conditions but we continue to push forwards through this period. We remain well prepared for the key trading days ahead."

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