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Ocado shares tumble after fire devastates hi-tech warehouse putting sales growth at risk

Blaze took 200 firefighters more than 24 hours to control at warehouse which handles 30,000 orders a week

Wednesday 06 February 2019 13:55 GMT
Ocado is trialing electric delivery cars

Shares in online grocer Ocado tumbled after it warned sales growth could be damaged by a devastating fire at one of its key warehouses.

Hundreds of firefighters tackled a blaze that broke out at the site an Andover, Hampshire, in the early hours of Tuesday and took more than 24 hours to control.

Ocado shares fell 8 per cent following the announcement of a potential slowdown until it can shift operations to other locations.

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

Ocado said the shutdown means there will be a “constraint on our ability to meet our growing customer demand”.

It added: “There will be a reduction in sales growth until we can increase capacity elsewhere.”

Some customer orders have been cancelled as a result of the blaze but Ocado said it was “working hard to resume normal service as soon as possible”.

The fire was declared a major incident as it swept through the building and locals were urged to keep their windows and doors shut due to the smoke.

Ocado said the fire, which started in a corner of the ambient grid, caused substantial damage to the majority of the building and its contents.

Part of the roof collapsed, but the firm confirmed no members of the Ocado team or the public were injured.

Hampshire Fire and Rescue Service said four firefighters had been treated for slight smoke inhalation.

One local tweeted during the blaze: “Just streets away – the noise, heat, smell and light pouring from the Ocado warehouse is frighteningly real.

“120+ firefighters are risking their lives tackling the blaze. Makes you truly appreciate the brave men and women of the fire service!! Thank you. Stay safe.”

Ocado stressed it has comprehensive insurance for the property, stock and equipment and for business interruption losses.

“Once we have had time to assess the damage and prepare a plan to return the CFC (customer fulfilment centre) to operation we will update further as appropriate,” Ocado said.

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Retail expert Bruno Monteyne at Bernstein said the sales impact was a “material dent in the UK retail business”.

He said it was unclear whether the cause of the fire – which remains unknown – has “any implications” for Ocado’s technology platform.

The Andover plant is one of four automated warehouses built by the group, which have enabled it to win a number of major international deals providing IT solutions to other retailers.

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