Ocado Shares Drop 13% as Kroger Reviews US Automated Warehouses
Ocado Shares Drop 13% as Kroger Reviews US Automated Warehouses

Ocado Shares Drop 13% as Kroger Reviews US Automated Warehouses

News summary

Ocado's shares plunged significantly following comments from Kroger's interim CEO Ron Sargent, who revealed that Kroger is conducting a comprehensive site-by-site review of its automated fulfilment network, which depends heavily on Ocado's robotic warehouse technology. While Kroger initially planned to build 20 automated customer fulfilment centres (CFCs) with Ocado, only eight have become operational, and Kroger is now focusing more on fulfilling e-commerce orders from existing stores to improve speed and efficiency. This strategic shift has raised concerns about the future expansion of Ocado's automated warehouse model, which has been central to its international growth, particularly in the U.S. market. Kroger's reevaluation comes amid broader cost-cutting and profitability efforts, with the company accelerating AI use and emphasizing store-based fulfilment in densely populated areas. Despite Ocado’s co-founder Tim Steiner expressing confidence in the partnership's potential, analysts view Kroger's cautious stance as a negative signal for Ocado’s technology sales and a threat to its growth prospects. The uncertainty has led to a significant drop in Ocado's market value, wiping out nearly £400 million amid investor worries over the viability of its high-cost robotic warehouse infrastructure.

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