Ocado courts new US grocers after Kroger and Sobeys retreat

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Ocado is in talks with several prospective US supermarket partners as it looks to rebuild its international pipeline following setbacks with Kroger and Sobeys.

The company said it had “multiple live engagements” in the US and was pitching retailers a range of “significantly evolved solutions”.

Its search for new American customers follows Kroger’s decision to close Ocado-powered robotic customer fulfilment centres in the US after demand fell short of expectations.

Canadian supermarket group Sobeys has also announced closures within its automated fulfilment network, adding to concerns about the progress of Ocado’s overseas partnerships.

The developments have contributed to a 36 per cent decline in Ocado’s share price over the past six months.

Ocado has sought to broaden the range of solutions it offers supermarkets, moving beyond the large, centralised customer fulfilment centres that initially formed the core of its international expansion strategy.

The group is increasingly promoting more flexible technology that can be deployed inside existing warehouses, smaller fulfilment sites and supermarket stores.

Chief executive Tim Steiner said the US remained a key growth opportunity for the company as retailers continued to examine how automation could improve the economics of online grocery.

Ocado’s latest half-year earnings were boosted by one-off termination payments linked to Kroger and Sobeys.

Excluding those payments, adjusted earnings fell 12 per cent to £81m during the period. The company nevertheless maintained its forecast that cash flow would turn positive during the current six-month period and remain positive across its next full financial year.

The update comes as Ocado faces pressure to demonstrate that it can attract new supermarket customers and generate sustainable returns from years of investment in robotics, artificial intelligence and fulfilment infrastructure.

Ocado also operates its UK online grocery business through a joint venture with Marks & Spencer.

The company’s international technology arm is central to its longer-term growth strategy, with supermarket partners using its automated systems to pick and deliver customer orders.

Securing another major US grocer would provide an important vote of confidence in the technology following the scaling back of its relationships with Kroger and Sobeys.

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Ocado courts new US grocers after Kroger and Sobeys retreat

health

Ocado is in talks with several prospective US supermarket partners as it looks to rebuild its international pipeline following setbacks with Kroger and Sobeys.

The company said it had “multiple live engagements” in the US and was pitching retailers a range of “significantly evolved solutions”.

Its search for new American customers follows Kroger’s decision to close Ocado-powered robotic customer fulfilment centres in the US after demand fell short of expectations.

Canadian supermarket group Sobeys has also announced closures within its automated fulfilment network, adding to concerns about the progress of Ocado’s overseas partnerships.

The developments have contributed to a 36 per cent decline in Ocado’s share price over the past six months.

Ocado has sought to broaden the range of solutions it offers supermarkets, moving beyond the large, centralised customer fulfilment centres that initially formed the core of its international expansion strategy.

The group is increasingly promoting more flexible technology that can be deployed inside existing warehouses, smaller fulfilment sites and supermarket stores.

Chief executive Tim Steiner said the US remained a key growth opportunity for the company as retailers continued to examine how automation could improve the economics of online grocery.

Ocado’s latest half-year earnings were boosted by one-off termination payments linked to Kroger and Sobeys.

Excluding those payments, adjusted earnings fell 12 per cent to £81m during the period. The company nevertheless maintained its forecast that cash flow would turn positive during the current six-month period and remain positive across its next full financial year.

The update comes as Ocado faces pressure to demonstrate that it can attract new supermarket customers and generate sustainable returns from years of investment in robotics, artificial intelligence and fulfilment infrastructure.

Ocado also operates its UK online grocery business through a joint venture with Marks & Spencer.

The company’s international technology arm is central to its longer-term growth strategy, with supermarket partners using its automated systems to pick and deliver customer orders.

Securing another major US grocer would provide an important vote of confidence in the technology following the scaling back of its relationships with Kroger and Sobeys.

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