Ocado hit by worker shortages and fire at one of its factories
Ocado will allocate up to £5m extra on pay increases, recruitment and signing-on bonuses for HGV drivers.
The firm also confirmed it will take a £10m hit because of a fire at one of its warehouses in south-east London, which resulted in around £35m worth of orders being cancelled.
Sales are down by 10% to £517.5m over the last quarter to August 29, party as a result of the fire, and also because of previous strong performances.
Despite the falls, Ocado signed up 64,000 new customers during the period, with 805,000 in total, and orders per week increased by 22%.
“Ocado’s Group Q3 retail revenues were down 10.6% y/y, however average orders remain robust at 338,000 per a week,” Ross Hindle, retail sector Analyst at Third Bridge.
“Ocado is retaining customer loyalty but it seems many people are simply spending less on food now they are out of the house more and commuting more regularly.”
“Ocado is also facing a squeeze. The big four grocers are gaining ground on home delivery whilst a new breed of on-demand food delivery start-ups also nibble at market share. Ocado is now aiming to increase capacity to 700,000 deliveries per week by 2022 as it looks to cement its place as the go-to online retailer.”
“Labour constraints remain a key risk highlighted by management. Labour constraints have plagued companies like Ocado since the start of 2021 and only worsened. There have also been food shortages as farmers and processors struggle with the same issues. Our experts say the picture may deteriorate further into Christmas.”
The Ocado share price is down by 2.44% during the morning session on Tuesday.