Ocado to build new £210m warehouse

Steve Dinneen
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OCADO yesterday announced it will build its second warehouse in North Warwickshire at a total cost of £210m.

The firm says the new distribution hub for its online grocery delivery business will be operational by 2012.

Ocado says the facility, which will create up to 2,000 jobs in the area, will allow it to expand its geographic coverage and increase order capacity.

It will have capacity for 120,000 orders per week initially, rising to 180,000 a week.

It paid £17.74m to acquire the 35 acre site on a 999 year lease.

The firm will fund the new centre, which will complement its existing warehouse in Hatfield, through money raised in its disappointing stock market flotation earlier this year.

Ocado was forced to slash its price at the eleventh hour from the original price range of 200p-275p to just 180p a share. Things have gone from bad to worse for the firm since the flotation, with shares now trading at around the 128p mark.

Analysts at Shore Capital warned the new warehouse could be bad news for investors. Clive Black said: “This development extends the time period for when Ocado will make meaningful profits for investors, given the carrying cost and the sub-optimal performance until it is filled and fully operational.

“For us this remains an unproven financial experiment... Accordingly, despite a very disappointing share price performance, with even greater relative pain, there could be substantially more capital depreciation yet.”