Ocado sales hit by warehouse fire

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image source, Reuters

Ocado's revenue grew by 11.2% in the 13 weeks to 13 March compared with the same period last year, although the online food retailer's income was hit by a fire in its warehouse in February.

It brought in £404m during the period, but the fire in its Andover base had a 1.2% impact on its sales.

The firm had more orders per week, but their average size was slightly lower.

Last month, Ocado announced a deal with Marks & Spencer to give the department store its first home delivery service.

It will start in September 2020 at the latest, once Ocado's current deal with Waitrose has expired.

'Temporary setback'

More than 30,000 orders - 10% of Ocado's capacity - were processed at the Andover warehouse, which was on fire for four days.

Chief executive Tim Steiner said: "The fire has been a setback, but it will only be a temporary one.

"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 that 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 and capacity at another customer fulfilment centre in Erith is being increased faster than planned to cope with the disruption.

Ocado is selling the operating system to other retailers and there was concern it could affect the other parts of its business.

Mr Steiner said that with the Marks & Spencer deal, he felt that "Ocado Retail has never been in a stronger position".

He added: "We are looking forward to the future with excitement and determination."

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: "Today's announcement leaves no doubt Ocado has its eyes firmly on the future, with the group letting investors know last month's warehouse fire will be nothing more than a temporary setback.

"The first quarter has gone about as well as can be expected and it's looking more and more like Ocado will make it over this bump in the road."

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