Ocado warehouse fire costs retailer £35 million in lost revenue
Ocado has revealed that a fire in its Erith warehouse over the summer led to a loss of £35 million worth of sales.
The online supermarket said the incident meant 300,00 customer orders were lost due to the need to cancel orders in the week following the fire and a temporary reduction in capacity for new delivery slots.
In a third quarter trading statement, Ocado said it had been performing in line with expectations before the incident with revenue edging down 1.8% in the first six weeks of the period. However, revenue declined by 19% in the remaining seven weeks.
Taking the pre-and post-fire performance of Ocado Retail together, revenue fell by 10.6% to £517.5 million in the quarter.
Tim Steiner, chairman of Ocado Retail, said: “Despite the challenges we faced in the period, I am delighted to report that Ocado Retail is performing well, improving the customer experience even further and continuing to grow the business in a post-lockdown environment. I would like to pay tribute to the efforts of all my colleagues who worked so hard to get Ocado back to business so quickly following the fire in Erith.”
Ocado said increased capacity at fulfilment centres in Hatfield and Dordon and new capacity in Andover and Purfleet have taken its total capacity when fully ramped up to just over 600,000 orders per week. This is helping to offset temporary extra safety measures put in place at Erith, where pre-fire capacity is expected to be fully restored by the end of November.
The retailer is also facing the additional challenge of the rising costs of labour, particularly for LGV and delivery drivers. It said this may result in costs of up to £5 million due to additional measures being taken to hire new staff, including raising hourly rates and offering signing-on bonuses.
Looking ahead, Steiner said: “With a market leading customer offer and technology, we are confident Ocado Retail will continue to grow market share as we help them to roll out even more capacity and we look forward to Christmas and delivering strong growth in the new financial year, with our long term outlook as compelling as ever.”