One of the largest UK warehouses of Ocado Group Plc is expected to be completely destroyed by a fire, limiting the online grocery's ability to meet customer demand and reduce revenue growth.

The eruption started Tuesday morning in the £ 45 million ($ 58 million) automated facility in Andover, England, which manages as many as 70,000 orders a week. Although it was under control, it caused a collapsed roof and damaged all robots and stock inside, firemen said. The turnover growth will suffer until the capacity can be increased elsewhere, according to the company.

"We expect the rest of the building to be lost in this fire," said Neil Odin, chief officer at Hampshire Fire and Rescue Service. "It is an incredibly difficult fire to enter because of the nature of the building." It will take a week before the site is safe to come in, he added.

Although nobody was injured, the incident throws a cloud over the growth prospects of the company after a period of rapid expansion. Earlier this week, Ocado confirmed its financial outlook for 2019, including an increase of 10 percent to 15 percent of retail sales, if economic conditions remain stable.

The warehouse was an example of technology that rivals such as Kroger Co. and Casino Guichard-Perrachon SA to enter into license agreements with Ocado. The company said Tuesday that it is talking to other retailers about possible deals, and renewed speculation about a possible collaboration with Marks & Spencer Group Plc.

Since Tuesday morning, the fire has prevented execution of some orders, Ocado said Wednesday. The company said it has comprehensive insurance coverage for property, supplies and equipment, as well as for business interruption losses.

The fire started in a small, elevated part of the warehouse, and the cause is unknown. Although sprinkler and alarm systems helped the fire brigade in the early stages of the fire, it spread at night. About 200 firefighters stayed on the spot at the same time, with services from the surrounding provinces having to help. Ocado & # 39; s trucks were not affected and were removed from the site.

It is the newest of various fires that have hit online store sites. E-commerce fashion vendor Asos Plc has had two fires: one at a distribution center in Germany that damaged the stock in 2017, the other at a warehouse in England in 2017, causing the company to stop taking orders on its website.

The five-storey warehouse of 240,000 square meters was opened in 2016 and provides approximately 10 percent of the capacity for food delivery. It handles more than 4,000 orders daily, using hundreds of robots to pick up groceries loaded on trucks and taken to homes in southern England.

Ocado has emphasized the expansion of its licensing of technology rather than its UK retail business, and the fall in the share price "appears to be a major overreaction," according to Sanford C. Bernstein, led by Bruno Monteyne, in a note.


Copyright 2019 Bloomberg.


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