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09 May 2019 | 09:25

Morrisons suspends deal to use capacity at Ocado's Erith warehouse until 2021

Morrisons has agreed to suspend using its share of capacity at Ocado's Erith warehouse until February 2021 following a fire at Ocado's Andover centre.

Ocado said this would allow it to continue to grow its business while continuing to investigate longer-term steps to replace the capacity lost as a result of the fire.

Morrisons would also be able to continue to grow by fulfilling orders from its own stores using Ocado's 'store pick' technology. currently accounts for over 10,000 orders per week at Erith and has the right to 30% of Erith's future order capacity.

Ocado said that Morrisons would not incur any of the costs associated with the use of the Erith warehouse during the suspension period and would also pay lower store pick fees.

The companies also agreed to relax certain exclusivity provisions, which would bring Morrisons "more in line" with the terms it has agreed with its international clients.

"Morrisons is a valued partner of Ocado and we are glad that we have been able to come to an equitable and pragmatic agreement that is in the interests of both parties," said Ocado CEO Tim Steiner.

"We will keep growing for our customers and save some cost, returning to the Erith CFC when it is more mature. Our new agreement allows us to have more than one digital partner, and opens the way for significant potential opportunities and partnerships in this important growth area for Morrisons," added Chief Executive David Potts.

At 9:25am:

(LON:MRW) Morrison Wm Supermarkets PLC share price was -3.2p at 210.4p

(LON:OCDO) Ocado Group Plc share price was +3p at 1356p

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