Coles’ army of factory robots will have to wait a while longer before they can get to work in the supermarket giant’s new automated warehouses, after the company confirmed delays to the construction timelines for the sites likely to cost more than $100 million.
The ASX-listed grocery retailer is working with British retail technology business Ocado to build two robotic facilities for home deliveries in Victoria and New South Wales that are designed to remove many of the pain points of online supermarket shopping, like short use-by dates for fresh produce and out-of-stock items.
But Coles has previously flagged delays to the construction of the sites, and on Friday confirmed that changes to the timelines for the project are set to increase the project capital and operating expenditure for the project by $50 million and $70 million respectively.
Overall capital expenditure for the project is expected to be $400 million.
In a statement to the ASX, Coles said that Ocado had informed it that there would be a delay in handing over the Victorian facility because more work was required to “rectify construction issues” with the grid, part of the automated technology within the warehouse, which were identified during quality control processes.
“Following further engagement with Ocado and in light of the revised hand over date, the commissioning of the Victorian customer fulfilment centre will be delayed with the incremental ramp up period now expected to commence in mid-FY25 (previously mid-FY24),” the company said.
The Ocado fulfilment centre in NSW is set to come online at the end of the second half of the 2024 financial year, having previously been slated to open in the middle of the 2024 year.
The robotic delivery centres are part of Coles’ broader automation plan, which includes machine-driven distribution centres that deliver dry goods to its stores that have been designed with German technology partner Witron.
The company opened its sprawling 34-metre high Witron facility in Redbank, Queensland in April, while another warehouse is slated to open in NSW in 2024.
All eyes will be on profits and food inflation at Coles next week when the company reports its full-year financial results on Tuesday. The market is expecting the retailer’s earnings margins to slip slightly for the 2023 year, but net profit after tax is predicted to edge upwards to more than 5 per cent to $1.1 billion for the year.
The supermarket giants are expected to show their resilience next week despite a volatile earnings season for retailers, but consumers and stock watchers will also be scrutinising details about food inflation at both Coles and Woolworths as households come under increasing pressure.
The most recent quarterly consumer price index figures from the Australian Bureau of Statistics (ABS) show that food and non-alcoholic beverage inflation was sitting at 7.5 per cent in the three months to June 2023 when compared with the same quarter in 2022.
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Source: Thanks smh.com