Kroger ditches plans for Ocado warehouse in US as it scales back sites further

Russ Mould, investment director at AJ Bell, said: “Seven-and-a-half years after an agreement with US supermarket giant Kroger which was seen as transformative for Ocado the relationship has soured somewhat.

“An enhanced compensation payment does at least take the edge off Kroger’s reduced use of Ocado’s technology, as does Ocado’s reiteration of guidance for a break into positive cash flow next year.

“Having built a successful web-based delivery service for a weekly shop in the UK, Ocado’s plan to roll-out its technology with partners across the globe, effectively offering a one-stop-shop solution for online groceries, generated significant excitement, particularly during Covid.

“However, that initial buzz has not been backed up to date and despite a decent advance on today’s announcement, the shares are more than 90% below the all-time highs they saw at the height of the pandemic in 2020.

“While Ocado may not match the ambitions once touted for it, a more disciplined approach could still underpin a successful business.”