StockMarketWire.com - Retailing logistics group Ocado warned of lower revenue and higher costs at its online grocery joint venture with Marks & Spencer, owing to a fire at a UK distribution centre and a shortage of drivers.

Third-quarter revenue at the JV had fallen 11%, including an 1.8% decline for the six weeks before the 16 July fire at the Erith customer fulfilment centre, and a 19% plunge for the seven weeks after the fire.

Ocado said that operating losses during the second half due to the fire, primarily from lost orders, were estimated to be around £10 million as the centre ramps back up to full capacity.

In addition, the impact of stock and fixed asset write-offs and other incremental costs associated with the fire were estimated to also be around £10 million.

Amounts recovered under insurance cover, net of deductibles, of around £10 million would be treated as exceptional income.

'The resulting net cost to Ocado, not covered by insurance, is therefore currently estimated to be around £10 million,' it said.

In addition, Ocado also said rising labour costs due to a driver shortage represented an 'increasingly important issue' for the industry that may result in up to £5 million impact to full-year numbers.

The cost reflected additional measures being taken to hire new staff, including raising hourly rates and offering signing-on bonuses.

'We will be working to mitigate these costs as best we can,' the company said. Story provided by StockMarketWire.com