Ocado to receive $350 million payout as Kroger shuts robotic warehouses

By Yadarisa Shabong and James Davey

Dec 5 (Reuters) - Ocado will receive a $350 million one-off payment from U.S. partner Kroger after the grocer opted to shut three robotic warehouses and scrap plans for another facility, the British technology group said on Friday.

Shares in Ocado jumped 10% in early trading on the news, paring 2025 losses to 33%.

The stock plunged 17% on November 18 after Kroger reset its grocery e-commerce strategy, dealing a major blow to the Ocado investment story.

Kroger said the warehouses it built with Ocado at Frederick in Maryland, Pleasant Prairie in Wisconsin and Groveland in Florida would close in January.

On Friday, Ocado said Kroger had also decided not to proceed with a planned warehouse in Charlotte, North Carolina, that was due to start operating in 2026.

Another site in Phoenix, Arizona, also due to open next year, will, however, proceed.

Ocado's initial deal with Kroger in 2018 saw it identify 20 U.S. sites to build robotic warehouses, making the group Ocado's most important partner. However, so far, only eight have gone live, including the three slated for closure.

Kroger plans instead to boost its presence in quick grocery delivery through expanded relationships with delivery firms Instacart, DoorDash and Uber Eats.

The $350 million compensation payment to be made in January 2026 reflects the loss to Ocado of future capacity fees for affected sites.

The closure of the three live sites will reduce Ocado's fee revenue in fiscal 2026 by about $50 million.

"Ocado reaffirms its priority of turning cash-flow positive during FY26, driven by continued growth in live and new sites, and underpinned by rigorous cost and capital discipline," it said.

Chief Executive Tim Steiner said: "We remain excited about the opportunity for Ocado's evolving products in the U.S. market."

(Reporting by Yadarisa Shabong in Bengaluru and James Davey in London; Editing by Nivedita Bhattacharjee and Emelia Sithole-Matarise)

Source: Reuters.