Kroger has agreed to a $350m (£262m) on-off cash payment to compensate Ocado following the US retailer’s decision to close three of the group’s tech-powered warehouses.
The decision reflected Kroger’s plan to close the three CFCs in Maryland, Wisconsin and Florida in January, as well its decision to no longer proceed with a new Ocado warehouse in North Carolina, one of the two planned CFCs due to go-live in 2026.
Ocado had previously guided for compensation of $250m related to the closures when the news was revealed in November. The news of the withdrawal by Kroger caused Ocado’s share price to crash by more than 20%.
This morning, Ocado said it continued to work “closely” with Kroger across the five live CFCs in Ohio, Texas, Georgia, Colorado and Michigan.
Ocado teams remained “well-embedded” within this network, supporting significant progress in operational efficiency, volume growth and increasing same day availability, resulting in a significant improvement in financial performance, the group added.
Shares rebounded on the announcement, climbing 12% to 206.5p as markets opened in London.
Can Ocado survive Kroger’s closure of three robotic CFCs?
Ocado Group CEO Tim Steiner said: “We continue to invest significant resources to support our partners at Kroger, and to help them build on our longstanding partnership.
“Ocado’s technology has evolved significantly to include both the new technologies that Kroger is currently deploying in its CFC network, as well as new fulfilment products that bring Ocado’s technology to a wider range of applications, including Store Based Automation to support ‘pick up’ and immediacy.”
“Our partners around the world have already deployed a wide range of these fulfilment technologies to great effect, enabling them to address a wide spectrum of geographies, population densities and online shopping missions, underpinned by Ocado’s world leading expertise and R&D capabilities. We remain excited about the opportunity for Ocado’s evolving products in the US market.”
The one-off payment of $350m will be made in January.
Ocado reaffirmed its priority of turning cashflow positive during the 2026 financial year, driven by continued growth in live and new sites, and underpinned by “rigorous cost and capital discipline”.
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