Mixed bag for Ocado as labour shortage hurts retail arm but group wins patent victory

Online grocer Ocado has revealed a slowdown in sales as it battles back from the impact of a warehouse fire, with labour shortages and the pace of price increases adding to its woes.

The company made the announcement hours after the wider group won key rulings in a patent infringement legal battle with an automated warehouse rival – helping Ocado shares rise in value.

Ocado Retail, the joint grocery venture with Marks & Spencer (M&S), reported a 3.9% fall in revenue during its fourth quarter to 28 November compared to the same period in 2020 – building on a 10.6% decline in the previous three months.

That included the impact of a fire at its warehouse in Erith, southeast London, in July, which disrupted deliveries.

Another automated site, which was destroyed by fire in 2019, only restarted operations in August.


It said that cost pressures, driver and warehouse worker shortages and more customers heading back to offices prior to the recent COVID rule changes all contributed to the falling sales.

However, Ocado Retail said it was looking forward to its “best ever” Christmas despite the challenges. It insisted there was no material shortage of products heading into the festive season.

More from Business

IMF tells UK to be ready to redeploy furlough if ‘widespread’ closures needed to tackle pandemic

COVID-19: Jobless rate falls amid further evidence of soft landing when furlough scheme ended

Why Whitehall is listening in carefully as BT’s biggest investor builds his stake

It expected revenues to grow between 10% and 15% next year as new capacity is added to its network.

Ocado Group shares were 9% up in late morning deals on the back of the forecast and the news that it had won an initial court battle in the US, where it was accused of patent infringement by rival AutoStore.

The dispute, which centres on robot-operated warehouse technology, has resulted in tit-for-tat lawsuits – leaving both potentially exposed to hundreds of millions of pounds in costs.

Image: ‘Bots’ are seen on the grid at an Ocado warehouse

AutoStore said it intended to challenge the early ruling while an Ocado spokesperson said: “We have consistently stated that Ocado does not infringe any valid AutoStore IP, and we are pleased that the judge has now agreed with us.

“This was a misconceived attempt by AutoStore to interfere with our business in the United States.

“We intend vigorously to continue our infringement claims against AutoStore in the United States and Europe.”

Ocado Retail chief executive Melanie Smith said of its performance: “The investments we have made over the past year mean we have significant capacity for growth in 2022 and we will continue to invest in facilities, systems and people in the year ahead to deliver on our long-term growth potential.

“We are working hard to manage current industry challenges, and Ocado Retail has great momentum as we get ready for another record Christmas and further strong progress next year.”