Shares in Ocado fell by over 10 per cent after one of its partners announced the closure of one of its robotic warehouses.
The retailer signed a deal with Canadian supermarket Sobeys in 2018 to launch its online grocery business using Ocado’s platform.
In an update, Ocado said Sobeys would close its fulfilment centre in Calgary after expansion was ‘slower than originally anticipated.’
The Calgary warehouse was the third to open under the partnership, and the remaining two – in Ontario and Montreal – will stay open.
The UK-listed retailer sells technology to retailers to pick and dispatch online food orders from robotic warehouses. It also runs its own grocery firm in partnership with Marks & Spencer.
Canadian retailer Sobeys penned a deal to use Ocado’s robotic warehouses in 2018
The Calgary closure is expected to reduce Ocado’s fee revenue by £7million this year, but the retailer said it expects compensation of £18million for the closure.
The shuttering of another warehouse marks another blow for Ocado, which has pinned its hopes on the expansion of its technology.
Last year, one of its key partners, Kroger, said it would close three of its robotic warehouses across the US. It sparked the biggest drop in its share price.
The pair had planned to build 20 robotic customer fulfilment centres across the US, but the roll-out has been slower than expected.
Investors are losing patience with Ocado as new openings with existing partners and further technology deals have failed to materialise.
Shares tumbled 11.87 per cent on Thursday, with the price down nearly 28 per cent over the past year.
Chief executive Tim Steiner said Ocado had ‘taken a pragmatic approach to refining the network’ and addressed ‘key challenges from early network planning decisions, in particular where the market has not developed as anticipated.
Online grocery in North America has continued to develop, and Ocado’s technology has evolved significantly since our first CFCs were launched in the region.
‘The changes we have made in our relationships with both Sobeys and Kroger represent a reset of our North American business, placing those partnerships in the best position to secure long-term growth, while reopening a substantial market for Ocado’s much-evolved technology.’
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