Ocado retail completes comeback but pauses warehouse expansions

Despite a growth in profit in the last quarter, online grocer Ocado Retail said that it does not expect to open new robotic warehouses in the UK for two to three years.

The company, a joint-venture between M&S and Ocado Group, saw its sales rise by almost 11 per cent to £609.4 million in the three months to 26 November. This was the fourth consecutive quarter in growth, up from 7.2 per cent the three months prior.

The company said that it expects similar levels of growth for 2024, with easing food price inflation predicted to offset higher growth in the volume of items sold.

Last year represented something of a comeback for the company, after it made a £500 million loss in 2022 in what has been described as a post-pandemic slump.

But in spite of this return to stability, Ocado Retail chief executive Hannah Gibson said that the company is operating at about 75 per cent of its capacity and does not expect to open any new robotic warehouses in the UK for the foreseeable future.

The company ramped up its capacity after being caught short during the height of the Covid-19 pandemic, but now surplus capacity represents a short-term cost to the business.

Speaking to reporters, Gibson said: "We're not expecting to open, or close, or change any sites in the near term.”

She added that capacity utilisation had improved from 60 per cent from earlier in the year, partly as a result of closing its oldest site in Hatfield and moving to a new modern location in Luton.

Ocado Retail operates seven customer fulfilment centres (CFCs) in the UK, which Gibson said have the potential to be better utilised. She said: "We're looking at that, trying to understand that better today and that will change the view of as and when would we need a new site, but we're not expecting anything for the next two or three years.”

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