Ocado sales growth held back by warehouse fire

Ocado has laid bare the impact to sales caused by a fire at its Andover facility, but insisted the incident was only a “temporary” setback.

The online grocer saw revenue rise 11.2% to £404 million in the 13 weeks to March 3.

This was slower than anticipated due to the closure of the Andover customer fulfilment centre (CFC) after a fire broke out in early February, with the impact equivalent to 1.2% of sales.

Without the fire, growth would have been about 12.4%, meaning the group missed out on about £4.5 million of income.

Ocado’s chief executive Tim Steiner insisted that the company was on top of the situation.

“Our first quarter was characterised by continued strong underlying growth in Ocado Retail but also the initial impact of the fire at our CFC in Andover on our headline numbers,” he said.

“The fire has been a setback, but it will be only a temporary one.

“Over the last few weeks, our teams have been working hard to minimise any disruption to our customers and we will build a state-of-the-art replacement facility that reflects all the innovations and improvements we have made since Andover opened in November 2016.”

Ocado also said the initial investigation into the causes of the fire did not suggest there was any risk relating to its model, which relies on robotic warehouse machines to pack orders.

Meanwhile a temporary delivery outpost is being set up in Andover while capacity at another CFC in Erith is being increased faster than planned to cope with the disruption.

During the period, the online grocer saw an increase of 11.3% in average orders per week to 314,000, while the average order size remained just above £110.

Last month Ocado confirmed plans for a 50/50 venture with Marks & Spencer.

M&S is set to acquire 50% of Ocado’s UK retail business for up to £750 million as part of the deal.

The JV will trade as Ocado.com but will stock M&S-branded products, and benefit from access to the retailer’s database of 12 million M&S food shoppers.

Read Full Story

FROM OUR PARTNERS