(qlmbusinessnews.com via theguardian.com – – Tue, 9th July 2019) London, Uk – –
Online grocer reports loss of £143m for first half but expects compensation from insurer
Ocado has said the fire at its hi-tech warehouse earlier this year cost it more than £100m.
The online grocer fell to a headline loss of £143m on sales of £882m in the six months to 2 June, dragged down by more than £100m of one-off costs relating to the fire that destroyed its distribution centre in Andover, Hampshire.
Ocado said the closure of the site – which had provided about a tenth of the company’s delivery capacity – knocked 2% off its 9.7% retail sales growth rate during the half.
The company made an underlying profit of £18.1m, down from £34.3m a year ago. Ocado said Andover-related disruption would punch a £15m hole in annual profits, but its finance director, Duncan Tatton-Brown, said it expected to be fully compensated by its insurer.
As part of its plans to maintain service for shoppers, Ocado has signed a deal with its client Morrisons, which allows the delivery firm to take back 30% of the space for two years at its new centre in Erith, south-east London. Andover is being rebuilt and Ocado also announced plans to build a new warehouse in Purfleet, Essex.
The fire put a dampener on Ocado’s plans for expansion as it prepares to embark on a new relationship with Marks & Spencer, which replaces an existing deal with Waitrose from next autumn. M&S is paying £750m for a 50% share of Ocado’s retail arm.
Investors shrugged off the Andover setback, sending Ocado shares up by more than 5%, to £12.34.
Bernstein analyst Bruno Monteyne said the company’s performance was in line with his expectations and questioned whether the “numbers even matter” given Ocado’s recent recent run of success selling its grocery-picking technology to foreign retail chains, including the US supermarket giant Kroger.
“Ocado’s valuation is driven by the solutions business,” he said.
By Zoe Wood