Ocado shares drop after electrical fault revealed as cause of fire
The company’s Andover facility was ravaged by a huge fire in February.
Shares in Ocado slumped on Monday after it emerged that an electrical fault was responsible for the massive fire at its Andover warehouse.
In a circular to shareholders, the online grocer reiterated its previous statement that the reasons behind the fire did not pose a threat to the group’s business model.
It said the accident had been caused by an electrical fault at one of the first generation battery charging units at the edge of an ambient storage grid.
This caused the plastic lid on the top of a grocery-carrying robot to catch alight.
In response to the fire, the company has removed the plastic lid from its robots and added localised smoke detectors. It also plans to add heat sensors in the storage grid.
The battery charging units in question were only used at the Andover site and not at Ocado’s other fulfilment centres.
Shares in the company fell as much as 5.4% in midday trading on Monday.
The fire, which broke out in early February, caused substantial damage to the warehouse and prompted an evacuation of homes in the surrounding area.
The company warned that it would see a fall in sales growth until it was able shift operations to other warehouses.
The incident also raised fears over Ocado’s technology, which it also provides to major overseas retailers such as Kroger in the US.
However, Ocado has repeatedly said there is no problem with its robotic warehouse technology.
Last month the company inked a new deal with retailer Coles in Australia.
The details of the fire were released as part of a document detailing arrangements for Ocado’s tie-up with Marks & Spencer, which was announced in late February.
M&S is set to acquire 50% of Ocado’s UK retail business for up to £750 million as part of the deal.
The JV will trade as Ocado.com but will stock M&S-branded products, and benefit from access to the retailer’s database of 12 million M&S food shoppers.
It will launch in 2020, following the termination of Ocado’s existing agreement with Waitrose.