Ocado, the online grocer and technology group, said its Canadian supermarket partner Sobeys had paused the opening of a fourth robotic warehouse planned for 2025 – a setback for the British firm which sent its shares sharply lower.
Ocado stock was down 11% in early afternoon trading after Sobeys said it would not open a customer fulfilment centre (CFC), as Ocado calls its automated warehouses, in Vancouver in 2025.
"We see this as bad news for Ocado as Canada has been performing well and (it) adds to another partner who is pulling back alongside Kroger (in the US) and problems at Coles (in Australia)," Bernstein analyst William Woods said.
Founded by three former Goldman Sachs bankers in 2000, including current CEO Tim Steiner, Ocado has divided opinion like few other stocks. Some view it as the future of grocery shopping, while others see it as a costly and complicated venture that will never make sustained profits.
Ocado and Sobeys have also agreed to end terms related to mutual exclusivity, which means they can seek other partners. Their initial partnership deal was signed in 2018.
'The go-live timeline for the Vancouver CFC will be under regular review, and the site will be able to commission and scale quickly when required,' Ocado said.
It and Sobeys would now focus on driving order and sales volumes across the three existing CFCs in Toronto, Montreal, and Calgary, along with manual fulfilment in nearly 100 stores.
Financial Guidance
Ocado said its financial guidance for 2024 was unchanged, together with its target to be cash flow positive in the mid-term.
It said Sobeys and US partner Kroger had both announced strong growth in digital sales in their latest quarterly results.
Ocado also noted that Ocado Retail, its online joint venture with Marks & Spencer, was currently Britain's fastest growing UK grocer.
'There is clear evidence that online is returning overall to being the fastest growing channel in grocery,' Ocado said.
However, it said in January it did not expect to open any new robotic warehouses in the UK for two to three years.
Earlier this month, Ocado lost its place in Britain's blue-chip FTSE 100 index.
