Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Retailing logistics group Ocado warned of lower revenue and higher costs at its online grocery joint venture with Marks & Spencer, owing to a fire at a UK distribution centre and a shortage of drivers.
Third-quarter revenue at the JV had fallen 11%, including an 1.8% decline for the six weeks before the 16 July fire at the Erith customer fulfilment centre, and a 19% plunge for the seven weeks after the fire.
Ocado said that operating losses during the second half due to the fire, primarily from lost orders, were estimated to be around £10 million as the centre ramps back up to full capacity.
In addition, the impact of stock and fixed asset write-offs and other incremental costs associated with the fire were estimated to also be around £10 million.
Amounts recovered under insurance cover, net of deductibles, of around £10 million would be treated as exceptional income.
'The resulting net cost to Ocado, not covered by insurance, is therefore currently estimated to be around £10 million,' it said.
In addition, Ocado also said rising labour costs due to a driver shortage represented an 'increasingly important issue' for the industry that may result in up to £5 million of impact to full-year numbers.
The cost reflected additional measures being taken to hire new staff, including raising hourly rates and offering signing-on bonuses.
'We will be working to mitigate these costs as best we can,' the company said.