Ocado has confirmed it is in active discussions with potential new partners as it seeks to recover from recent decisions by two major supermarket chains to shut down robotic warehouses. The London-listed retail technology firm reported 'live engagement' with prospective partners in the United States, following the termination of several exclusivity agreements that had previously limited its expansion.
New Opportunities in Multiple Regions
The end of these exclusivity deals has enabled Ocado to intensify its activities across various markets. The company highlighted 'multiple new grocery prospects' in North America, Europe, and the Asia Pacific region. This comes after two key partners—Kroger in the US and Sobeys in Canada—announced plans to close several Ocado-operated robotic warehouses, citing weak consumer demand.
Financial Impact of Warehouse Closures
On Thursday, Ocado disclosed that one-off fees associated with the closure plans significantly boosted its revenues and earnings for the first half of the year. Group revenues surged by 54% to £1.04 billion for the six months ending May 31, compared to the same period last year. This increase was largely driven by £354 million in fees and other revenues tied to the proposed closures. However, when stripping out these one-off impacts, revenues rose by just 1%.
Earnings before tax improved to £17 million, a stark contrast to the £173 million loss recorded a year earlier. The company's UK joint venture with Marks & Spencer, Ocado Retail, also performed well, with revenues up 15% and stronger earnings during the period.
CEO Comments and Future Outlook
Tim Steiner, chief executive of Ocado, commented: 'The first half of the year has seen accelerating international volume growth, strong commercial momentum, improved organisational efficiency, and rigorous cost discipline. Since the start of the year, we’ve been re-engaging retailers across some of the world’s largest grocery markets, with the USA a particular focus, supported by a significantly evolved portfolio of technology solutions.'
The update comes a week after Steiner announced he would remain as CEO until December next year, while confirming succession plans that will be finalized at the start of the 2027-28 financial year, beginning December 1, 2027. This follows reports of tensions with Ocado chair Adam Warby and shareholder Jorn Rausing, a Tetra Pak billionaire and board member.
Market Reaction
Shares in Ocado fell by 15% on Thursday morning, reflecting investor concerns amid the ongoing restructuring and partnership changes.
