Ocado Group PLC (LON:OCDO) delivered an 11.2% increase in first-quarter revenue despite the impact of a fire at its warehouse in Andover, Hampshire last month.
The online grocer said the blaze, which stretched four days, carved about 1.2% off sales in the quarter ended March 3 but retail revenue still rose to £404.0mln from £363.4mln a year ago.
READ: Ocado and M&S confirm talks regarding joint venture
Average orders per week increased 11.3% to 314,000 but the average order size shrunk by 0.2% to £110.24.
The Andover warehouse accounts for about 10% of Ocado’s capacity and more than 30,000 orders a week are processed by robots.
Ocado investigates cause of fire
Ocado said an investigation into the cause of the fire is being carried out and it will update the market once it is has been completed.
The group will in “due course” inform the market of its plans to replace capacity in the “short and medium term” and the impact the fire has had on its target for 10-15% retail revenue growth in 2019.
The company has set up a temporary spoke in Andover to help minimise disruption to customers and will expand capacity its Erith warehouse father than previously planned.
“The fire has been a setback, but it will be only a temporary one,” said chief executive Tim Steiner.
“Over the last few weeks, our teams have been working hard to minimise any disruption to our customers and we will build a state-of-the-art replacement facility that reflects all the innovations and improvements we have made since Andover opened in November 2016.”
Shares rose 2.7% to 1,179p in morning trading.
Ocado and M&S tie-up
Last month Ocado agreed on a £1.5bn deal to launch Marks & Spencer Group PLC’s (LON:MKS) online grocery delivery service.
M&S will pay Ocado £750mln for a 50% share of the new Ocado.com joint-venture. The joint venture will deliver M&S grocery products from September 2020 when Ocado’s deal with Waitrose expires.
"Going forward, it will be very interesting to assess if there is any loss of revenues as customers switch from Ocado to Waitrose following the Marks & Spencer deal," said Neil Wilson, chief market analyst at Markets.com