Warehouse fire sparked by out of control supermarket robots costs Ocado £10m
Ocado has suffered a £10 million nursing loss after a major fire at his largest robot warehouse.
The online grocer said the fire at its Erith site, in south-east London, started in July when a malfunction collided three of its machines.
Hundreds of employees had to be evacuated and 100 firefighters and 15 fire engines were deployed to deal with the incident.
Ocado said the fire at his robot warehouse in Erith, south-east London, started in July when three of his machines collided due to a malfunction.
And while only a small portion of the warehouse was damaged, the disruption still caused chaos.
Ocado said the Erith site had to close for three days, canceling orders and still not being at full capacity.
Other warehouses took on some of the burden, but it meant some orders were impacted the following week and Ocado had to reduce grocery delivery times to customers for nearly two months.
As a result, the company’s UK business, a joint venture with Marks & Spencer, lost an estimated 300,000 orders worth £35 million.
As a result, the company’s third-quarter revenue fell by 10.6 percent from a year ago to £517.5 million.
Ocado said it suffered other blows as well, such as a loss of stock, with total costs not covered by insurance reaching £10 million.
Boss Tim Steiner praised staff for getting things back on track after fire and predicted ‘strong growth’ in 2022
Shares fell 1.4 percent, or 26.5 pence, to 1,859 pence after the dismal update.
The company’s pioneering warehouse in Erith usually handles 150,000 orders per week, thanks to more than 1,000 robots on a grid that spin to pick up groceries for delivery.
However, the fire was the second major fire at one of the company’s warehouses in two years, after a much more damaging inferno burned down its Andover, Hampshire site in 2019.
Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, said: “Ocado cannot afford these kinds of operational problems.
As we enter the retailer’s most important trading period of the year, it’s critical that all the dents are ironed out so he can take full advantage of the holiday season.”
Ocado said sales fell from £578.8 million to £517.5 million in the 13 weeks to August 29, while average orders per week rose from 333,000 to 338,000.
Chief executive Tim Steiner said: “Despite the challenges we faced during the period, I am pleased to report that Ocado Retail is performing well, further improving the customer experience and continuing to grow the business in a post-lockdown environment.
“I want to pay tribute to the efforts of all my colleagues who have worked so hard to get Ocado back to work so soon after the fire.
“The success of these efforts once again demonstrated the resilience of Ocado and his people.”
The company forecasts ‘strong growth’ in 2022.
Benefits for truck drivers will cost £5m
Ocado will spend up to £5m extra this year on pay increases and sign-up bonuses for truck drivers.
The online grocer said the shortage caused by Brexit and the pandemic has become an increasingly important issue.
It called on the government to add truck drivers to its list of skilled shortages to fill supply chain vacancies across the country.
Ocado chairman and co-founder Tim Steiner said increasing the number of testers would be one solution.
He said: ‘What is clear is that there is a shortage and it appears to have been significantly exacerbated by the lack of testing that took place while testing facilities were closed or restricted during the Covid period.
“We wouldn’t want the shortage to be tackled by putting unqualified or dangerous drivers on the road, but as a country we have to tackle the shortage.”