Ocado’s losses deepen sharply as grocer foots £100m bill from warehouse fire

Online supermarket says Andover blaze set it back £99m and reduced sales by 2 per cent during first half of 2019

Hi-tech warehouse processed 30,000 orders a week before February blaze (Reuters)

Ocado’s losses widened tenfold in the first half of the year after a devastating warehouse fire in February.

The online supermarket made a pre-tax loss of £143m in the six months ending on 2 June compared with a £14m loss in the first half of 2018.

Although Ocado’s performance was also hurt by accounting changes and other large costs, the biggest hit came from the blaze at the warehouse in Andover, Hampshire, which destroyed the building, machinery and all goods.

The hi-tech robotic warehouse provided around 10 per cent of Ocado’s capacity, processing more than 30,000 orders a week.

On Tuesday, Ocado put the cost of the disaster at £99m, including an offset from insurance payments that have come in so far, and said the fire reduced sales by 2 per cent.

Revenues remained healthy, with retail rising 10 per cent. Sales also grew at the smaller Ocado Solutions business, which provides services and technology to grocery e-commerce firms.

“Assuming economic conditions remain broadly stable, we continue to be confident that Ocado Retail will achieve retail revenue growth of 10-15 per cent in the balance of the 2019 financial year, despite the impact of the Andover fire,” the company said.

Tim Steiner, chief executive, said growth will come partly from a new joint venture with Marks & Spencer, which will replace Ocado’s current partnership with Waitrose next year.

"We have never had as many opportunities to grow as we do today,” he added.

But Ocado also noted a number of risks to its future performance, including the risk of “negative implications caused by final Brexit terms, such as increase in import costs or difficulty in hiring employees”.

The market took the company’s optimistic message to heart, lifting its shares as much as 11 per cent in morning trading.