Coles, the supermarket giant, has encountered setbacks with its Victoria-based customer fulfilment centre (CFC) due to construction issues. This delay has extended the timeline by a year and escalated costs by tens of millions of dollars.
The delay stems from complications in the handover of the planned CFC, as conveyed by online grocery technology company Ocado. Additional corrective work is needed to address grid-related construction problems identified during quality control checks for the Victorian CFC.
Initially, Coles had announced progress on its two online customer fulfilment centres backed by Ocado in New South Wales and Victoria. While the Wetherill Park automated CFC in NSW had experienced work delays, the Truganina-based automated CFC in Victoria had been advancing, with recruitment efforts underway and leadership roles filled.
However, discussions with Ocado prompted a revision of the handover date for the Victorian CFC. Consequently, the incremental ramp-up period for the Victorian facility is now projected to commence in mid-FY25, a shift from the previous projection of mid-FY24.
Likewise, the NSW CFC, also being constructed by Ocado, anticipates an incremental ramp-up period beginning in the latter part of the second half of FY24, a refinement of the earlier guidance.
The repercussions of these delays are expected to contribute to an increase of approximately $70 million in project capital expenditure and $50 million in operating expenditure. Coles clarifies that the additional capital investment will remain within its capital expenditure allocation.
The retailer’s total capital expenditure is now anticipated to reach approximately $400 million, with 55 percent having been incurred by the end of FY23. The remaining balance is projected to be incurred during FY24 and FY25.
