Ocado slumps to £215m losses after fire destroys robot warehouse

Online supermarket’s share price rises despite 27% fall in earnings

Chris Baynes
Tuesday 11 February 2020 14:10 GMT
The blaze at Ocado's state-of-the-art warehouse in Andover cost the company £94.1m
The blaze at Ocado's state-of-the-art warehouse in Andover cost the company £94.1m

Ocado slumped to pre-tax losses of £214.5m last year after a major fire devastated its flagship warehouse.

The online supermarket suffered a 27 per cent fall in core earnings in the 12 months to 1 December, helping to push it losses to nearly five times as much as the previous year.

The British company was forced to foot a bill of £94.1m in relation to a blaze that destroyed its hi-tech robot-operated warehouse in Andover, Hampshire, in February last year. The building provided about 10 per cent of Ocado’s capacity, processing more than 30,000 orders a week.

Ocado made earnings of £43.3m before interest and tax, down from £59.5m the previous year.

That outcome, which also reflected accounting changes and the costs of share schemes, was broadly in line with analysts’ forecasts.

Ocado’s shares were up 1.2 per cent early on Tuesday despite the announced losses.

The firm has transformed itself over the last two years from a domestic grocery delivery company to a provider of state-of-the-art online retail technology, winning partnerships with Kroger in the United States, Casino in France, and, most recently, Aeon in Japan.

Those deals have helped push Ocado’s shares 31 per cent higher in the last year, giving the company an £8.6bn stock market valuation. That value is well above those of traditional British supermarket groups such as Sainsbury’s, which is worth £4.4bn, and Marks & Spencer at £3.5bn, according to Refinitiv Eikon data.

“We are pleased to report results which show strong momentum in the business,” said Ocado’s chief executive Tim Steiner.

“Although statutory results reflected a combination of factors, including the impact of the Andover fire, the underlying performance of Ocado Retail and the successful growth of Ocado Solutions were very encouraging.”

The company’s retail division is now a joint venture between Ocado Group and M&S. Their deal, completed in August, brought an end to Ocado’s supply contract with upmarket supermarket chain Waitrose in September 2020 and launched M&S’s first grocery home delivery service.

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