Ocado slides 17% as US partner Kroger closes robotic warehouses

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automated warehouses in January, dealing a heavy blow to the Ocado ‌investment story.Ocado stock closed down 17.4% as the group also said its fee revenue would fall by about $50 million next year as a result of the closures,‌ extending 2025 losses for the shares to 40.5%.The group had a stock market value of 21.7 billion pounds ($28.5 billion) during the COVID pandemic in 2020, briefly overtaking UK industry leader Tesco, but is now valued at less than 2 billion pounds.KROGER HAD SIGNALLED RETREAT FROM AUTOMATED WAREHOUSESKroger, which in September signalled a potential retreat from investment in automated warehouses, said it had decided to close the sites ⁠because they had not met financial expectations.It plans instead ‌to boost its presence in quick grocery delivery through expanded relationships with delivery firms Instacart, DoorDash and Uber Eats.Shore Capital analyst Clive Black, a long-time Ocado sceptic, said Kroger's move was "a devastating ‍blow to the credibility of the Ocado Group proposition".He said that while Ocado's model may work financially in densely populated and affluent urban locations, capital-intensive, centralised fulfilment of multi-temperature foodstuffs to a dispersed customer set does not."That means Ocado's previously spoken total addressable market has been blitzed,"​ he added.Bernstein analyst William Woods said he struggled to see Ocado securing further major U.S. partnerships.In July, Ocado CEO Tim ‌Steiner told Reuters the U.S. was "an enormous ongoing opportunity" for the group.Ocado has 12 other international partners, including Aeon in Japan and Lotte Shopping in South Korea.INITIAL KROGER DEAL STRUCK IN 2018Ocado struck a deal with Kroger in 2018 to help the U.S. retailer develop its grocery delivery business.The initial agreement saw Kroger identify 20 U.S. sites to build robotic warehouses, or customer fulfilment centres (CFCs) as Ocado calls them, making the group Ocado's most important partner.However, so far, only eight sites have ⁠gone live and three are now slated for closure - at Frederick in ​Maryland, Pleasant Prairie in Wisconsin and Groveland in Florida.Ocado and Kroger would continue to ​operate the remaining five sites, with Kroger monitoring their progress.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P Futures6,740.75 +79.25 (+1.19%)Dow Futures46,462.00 +254.00 (+0.55%)Nasdaq Futures25,148.75 +427.00 (+1.73%)Russell 2000 Futures2,378.10 +23.20 (+0.99%)VIX23.66 -1.03 (-4.17%)Gold4,094.60 +11.80 (+0.29%)PortfolioSign in to access your portfolioSign inTop gainersNUVB Nuvation Bio Inc. 7.15 +2.35 (+48.96%)EXAS Exact Sciences Corporation 86.18 +16.50 (+23.68%)AMTM Amentum Holdings, Inc. 25.52 +3.73 (+17.12%)PACS PACS Group, Inc. 16.83 +2.40 (+16.63%)TMDX TransMedics Group, Inc. 133.47 +16.40 (+14.01%)Top losersWIX Wix.com Ltd. 101.70 -25.22 (-19.87%)DGNX Diginex Limited 13.46 -2.74 (-16.91%)QFIN Qfin Holdings, Inc. 19.23 -3.19 (-14.23%)ES Eversource Energy 65.26 -9.28 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