Ocado has revealed that the fire at its warehouse in south-east London in July will leave it with a £10m loss, and warned it expects to spend up to £5m hiring and paying delivery drivers amid a nationwide shortage.
The blaze at the facility in Erith caused by the collision of three robots, the online supermarket’s third in three years, resulted in 300,000 orders, or about £35m of revenue, being lost.
Ocado said the business disruption cost it £10m, plus another £10m for stock and other write-offs. The resulting net cost, not covered by insurance, is estimated to be £10m, which will drag down profits for the current year.
Ocado also faces a bill of up to £5m this year because of the rising cost of large goods vehicle and delivery drivers. A surge in online shopping during the pandemic coupled with a national driver shortage caused by Brexit has forced Ocado, and other supermarket groups, to raise hourly rates and offer signing-on bonuses.
Ocado said revenues were down 1.8% in the first six weeks of its latest quarter, the 13 weeks to 29 August, which worsened to a 19% slump in the remaining seven weeks of the quarter because of the fire. Overall, revenues fell 10.6% to £517.5m in the quarter, while average orders a week increased 1.4% to 338,000.
The online grocer said it had ramped up warehouse capacity at Purfleet in Essex and Andoverin Hampshire, with the latter processing 20,000 orders a week. This helped offset additional safety measures at Erith, which Ocado expects to return to pre-fire capacity by the end of November, in time for what it expects to be strong Christmas trading.
Ocado said it had attracted a record number of new customers, up 64,000 to 805,000. In the first six weeks, orders a week climbed 22% while the value of the average basket continued to normalise to £124, down from £141 a year earlier, as consumers spend more on the high street amid the easing of pandemic restrictions.