Ocado hits six-year low after Canadian companion delays robo-warehouse

Ocado shares crashed to their lowest for more than six years after a setback with a Canadian partner.

The online supermarket and technology firm said that grocery chain Sobeys has decided to delay opening its fourth robotic warehouse in Vancouver.

It marked another dismal episode for Ocado, which sells automated warehouse technology as well as running a joint venture grocery website with Marks & Spencer.

Tech blow: Ocado said that grocery chain Sobeys has decided to delay opening its fourth robotic warehouse in Vancouver

Shares fell 12.1 per cent to 310p – the lowest level since late 2017. Shares are down 60 per cent this year and 90 per cent since their 2020 peak.

‘All the share price gains generated by the hype around Ocado supposedly revolutionising the grocery sector have now been wiped out,’ said Dan Coatsworth, investment analyst at AJ Bell.

Instead of opening another robotic hub in 2025 for Sobeys, Ocado said it will turn its attention to boosting orders and sales across its existing warehouses.

And a mutual exclusivity agreement between the London-listed company and Canada’s second largest supermarket chain has also come to an end after six years. This means they can both make deals with other partners.

As well as its woes in Canada, Ocado is in a legal spat with M&S over a disputed payment relating to their joint venture tie-up. 

The stock price plunge is bad news for boss Tim Steiner, who needs to boost shares to £29.69 in order to receive a £15million pay award in three years’ time.

Coatsworth said that while Ocado was supposed to be ‘the magic ingredient’ for other grocery companies to use robots, it ‘has only managed to sign up a few new deals in recent years, despite the pandemic demonstrating the need to have strong systems to support online demand’.

There have been signs of a turnaround under the steer of new Ocado Retail boss Hannah Gibson.

Industry data this week revealed it was the fastest growing grocer for a fourth month in a row this month. 

Insights firm Kantar said that online grocery was seeing a resurgence after a post-pandemic lull.

M&S bosses were previously left disappointed by Ocado’s dismal performance since the £750million tie-up in 2019.