Ocado plans to cut its workforce by 5%, affecting up to 1,000 jobs, according to report in The Sunday Times.
Most redundancies will be made at Ocado’s UK head office, across technology teams as well as back office roles including legal, finance and human resources, the report – citing an unnamed source – said.
“We regularly review our operations to ensure we’re set up for long-term success,” an Ocado Group spokesman told The Grocer. “If and when decisions are made that affect our people, we are committed to communicating with them directly and ensuring they are supported throughout.”
Early last year, Ocado shared its strategy of “rigorous cost and capital discipline” and its plan to significantly reduce its technology spend to around £60m – down from around £250m in 2025 – in 2027. And having spent big on research and development, the company at the time said it was ”now moving into a new R&D cycle that will focus on a smaller number of targeted enhancements to our platform”.
The company did not link the job losses report to the recent announcements from its North American clients. Nevertheless, the news follows a bruising few months for the warehouse automation technology group.
Last month, Canadian supermarket giant Sobeys closed its Calgary Ocado-powered warehouse, in a blow to Ocado’s international ambitions. The company will, however, continue with its two other Ocado CFCs in Toronto and Montreal, where e-commerce penetration is improving.
In November, Kroger announced it was to close three of its Ocado tech-powered CFCs in January. The decision will mean Ocado Group’s fee revenue this year will take a $50m hit.
Ocado’s share price fell by more than 19% in the wake of the announcement by the US retail giant.
Analysts’ takes of the announcements have been mixed. JP Morgan analyst Marcus Diebel said while the Sobeys move was “clearly negative news” Ocado “remains one of our top picks in the internet space as we argue that current share price levels considerably undervalue the company’s portfolio of modules”.
Clive Black, head of consumer research at Shore Capital, said the announcements were “a near knockout punch” for Ocado and “a dreadful acclamation of what Morrison, Waitrose and others already knew: capital-intensive, centralised fulfilment of food to a dispersed mass-market customer does not financially work”.
“With its leverage, we worry about Ocado more not less,” he added. “How may more punches can it take?”
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