Ocado shares dented by fire at hi-tech warehouse

425
Ocado
// Ocado shares fell in wake of fire at robotic warehouse in Andover
// Shares fell by 7.8% yesterday
// 20 fire engines and 200 firefighters were called to the highly automated site

A fire which took place at Ocado’s flagship robotic distribution centre in Andover has left a dent in the retailer’s shares.

Ocado shares fell by 7.8 per cent yesterday, following news of a potential slowdown as the online grocer shifts operations to other locations.

Around 20 fire engines and 200 firefighters were called to the highly-automated site, where the fire raged for over 24 hours from the early hours of Tuesday.

The cause of the fire still remains unknown.

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

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

“Whilst we are informed by the fire brigade that it is now under control, during the night part of the roof collapsed and there has been substantial damage to the majority of the building and its contents,” Ocado said.

“As a result of this incident there will be a constraint on our ability to meet our growing customer demand and there will be a reduction in sales growth until we can increase capacity elsewhere.”

Meanwhile, the company currently has comprehensive insurance cover for the Andover customer fulfilment centre complex as well as the stock and equipment on site, and for business interruption losses.

Ocado has a one per cent share of UK’s grocery market, but its £7.2 billion stock market valuation has been fuelled by the business’ tech side – whereby it offered international retailers the infrastructure and software to develop their own online grocery businesses to compete with the likes of Amazon.

“For those investors who mainly value Ocado as a technology business, this 10 per cent dent (in retail capacity) in the near term, should not make a huge difference,” Bernstein analyst Bruno Monteyne said.

“What is totally unclear to us at this stage is whether the cause of the fire has any implications for the technology platform itself.”

Click here to sign up to Retail Gazette‘s free daily email newsletter