Ocado says Kroger CFC closures to dent revenues, shares slide

18th Nov 2025 14:38

(Sharecast News) - Ocado shares tumbled on Tuesday after it said the closure of three customer fulfilment centres in US partner Kroger's live network will reduce its FY26 revenues by around $50m (£38m).

Kroger said in a statement that it plans to close fulfilment centres in Frederick (Maryland), Pleasant Prairie (Wisconsin), and Groveland (Florida), in January 2026.

The US retailer also said: "In geographies where Kroger sees higher density of demand, the company will continue to take advantage of automated customer fulfilment to increase customer engagement, capacity and improve productivity and profitability.

"As part of its comprehensive hybrid fulfilment network, Kroger will also pilot capital-light, store-based automation in high-volume geographies to improve fulfilment capabilities and elevate the in-store customer experience. The adjustments to the network combined with increased store-based fulfilment will contribute to ROIC improvement."

Ocado said that it and Kroger will continue to operate CFCs in Monroe (Ohio), Dallas (Texas), Atlanta (Georgia), Denver (Colorado), and Detroit (Michigan).

"Ocado continues to support Kroger to optimise logistics operations and drive profitable volume growth in these remaining sites, with constructive ongoing discussions around further use of Ocado's technology to support Kroger," it said. "Ocado continues to engage with Kroger on these and other matters, and expects significant growth in the US market, both with CFCs and Store Based Automation."

Ocado expects to receive compensation of more than $250m for fees related to the early closure of the three CFCs.

The shares closed down 19.8% at 174.75p.

Danni Hewson, head of financial analysis at AJ Bell, said: "It's been a stinker of a day for Ocado shares, which have tumbled to their lowest level since 2013 after its US partner Kroger announced it was closing three warehouses currently powered by the British company's tech.

"Ocado is seen by many as an undercover tech company and more of a 'jam tomorrow' deal, but one that has never quite managed to satisfy investors' sweet tooth. Despite its huge potential the company has never quite lived up to expectations, and news that Kroger is cutting back on investment rather than scaling up is a significant setback.

"Ocado has put out a statement to try and mitigate the situation, saying Kroger will continue to use its systems in warehouses where high demand makes the sizeable outlay on its tech desirable, and that further deployment by Kroger is possible in future, along with other US opportunities. But investors will be looking at the bird in hand, and with technology becoming smarter, faster and potentially cheaper thanks to the power of AI, it could be Ocado is at risk of being left behind."