Ocado warns of driver shortage and says sales fell 10.6% after fire

Ocado Retail has warned of increased prices from a shortage of drivers, because it reported a ten.6 per cent fall in income after a fire at its London warehouse disrupted operations over the summer time.

The Hatfield-headquartered agency, which is a three way partnership between Ocado Group and Marks & Spencer, mentioned that it at present wanted to pay drivers extra and provide sign-on bonuses and known as on the Government so as to add HGV drivers to the expert shortage listing.

The figures evaluate to a 54 per cent rise in income in the identical quarter in 2020 when ongoing pandemic restrictions drove important demand in the course of the usually slower summer time months. 

Online grocer Ocado Retail has reported a 10.6 per cent fall in revenue in its latest quarter, after a fire at its London warehouse disrupted operations over the summer

Online grocer Ocado Retail has reported a ten.6 per cent fall in income in its newest quarter, after a fire at its London warehouse disrupted operations over the summer time

Overall, Ocado Retail income totalled £517.5 million within the third quarter to 29 August versus £578.8 million in the identical quarter final 12 months. Revenue had grown 19.8 per cent in its first half.

The UK supply enterprise Ocado Retail – a division of Ocado – is owned 50-50 by it and accomplice M&S, after the web grocery pioneer inked a deal to switch its Waitrose-sourced merchandise with Marks and Spencers items in 2020.

Ocado highlighted the rising prices of labour, notably for supply and truck drivers.

It mentioned which will end in an as much as £5 million hit to full-year numbers, reflecting increased hourly pay charges and signing-on bonuses. 

But it added: ‘We will probably be working to mitigate these prices as greatest we are able to.’

Ocado mentioned the Government wanted to assist get extra drivers on the street safely, making certain they might get HGV assessments faster whereas nonetheless being educated correctly.

Ocado chairman and co-founder Tim Steiner added: ‘Making it simpler is the correct reply… it’s necessary to have the ability to get extra individuals by way of the method.

‘If you possibly can get extra individuals by way of the method by growing the quantity of testers, you possibly can run twice the quantity of assessments then that could possibly be an alternate answer.

‘What is obvious is that there’s a shortage and it appears to have been considerably exacerbated by the dearth of testing that went on whereas testing amenities have been closed or restricted in the course of the Covid interval.

‘We wouldn’t need the shortage to be addressed by placing unqualified or harmful drivers on the street, however we do want as a rustic to deal with the shortage.’

The retailer mentioned that over the primary six weeks of the quarter it carried out consistent with expectations, with income down 1.8 per cent, reflecting robust comparative numbers with final 12 months.

However, within the seven weeks after the 16 July fire on the depot in Erith, southeast London, income declined by 19 per cent.

In addition to cancelling orders within the week following the fire, the short-term discount in capability lowered its skill to supply slots to new prospects. 

Ocado Retail estimates that in that interval of short-term disruption it misplaced round 300,000 orders, or round £35 million of income. 

Operating losses in the course of the second half as a result of enterprise disruption, primarily misplaced orders, attributable to the fire have been estimated at round £10 million.

In addition, the impression of inventory and fastened asset write-offs and different incremental prices related to the fire are estimated to even be round £10 million.

Additional security measures have been put in place at Erith, and Ocado Retail expects pre-fire capability to be totally restored by the tip of November in time for what the enterprise expects to be ‘robust Christmas buying and selling’. 

It was the third fire to hit an Ocado warehouse in three years, with its website in Andover, Hampshire, solely just lately returning to full operation two years after a blaze.

Ocado shares have soared in recent years but are down 35% on their peak

Ocado shares have soared lately however are down 35% on their peak

Despite the falls, Ocado mentioned it signed up 64,000 new prospects in the course of the interval, with 805,000 in complete, and orders per week rose 22 per cent.

However, the typical basket measurement was down 12 per cent to £124 in contrast with £141 a 12 months in the past. 

Looking forward, the three way partnership forecasts a ‘robust’ income development in its 2021-22 12 months and past with new warehouses set to open in Bicester and Luton, which can prolong complete capability even additional to round 700,000 orders per week.  

Ocado shares have been a pandemic winner, rising greater than 170 per cent from their February 2020 degree to virtually attain 3,000p final autumn and earlier this 12 months. 

Since February shares have sunk 35 per cent, nevertheless, and have been down 2.5 per cent, or 47p, at 1,838.5p at the moment. 

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