Ocado shares dive as 1,000 jobs axed in £150m cost-cutting drive

(Sharecast News) - Shares in UK grocer and technology group Ocado slumped on Thursday said it would be slashing around 1,000 jobs as part of a drive to save £150m in costs after setbacks to its automated warehouse programme rollout. The company was hit last year when the US grocery chain Kroger and Canada's Sobeys said they would close Ocado-designed customer fulfilment centres and pivot to deliveries from local stores.

Around two thirds of the job losses would hit UK operations, with most of those cuts affect staff at the firm's headquarters in Hatfield, Hertfordshire. Shares in the company were down almost 8% in London.

It said "key learnings" from the closures had been addressed with the North American market "now fully open" while the ending of exclusivity deals across wider global markets enabled "a return to multiple mature grocery markets with a significantly evolved solutions proposition".

"We have largely completed a very significant phase of investment in our robotics and automation capabilities. As that development cycle concludes and we accelerate deployment of our latest products, we expect aggregate technology and support costs to continue reducing," said chief executive Tim Steiner.

He added that this would result in "significant" job losses as it scaled back research and development, adopted efficiencies through the use of artificial intelligence, and "associated reductions and cost discipline in support functions".

The company was hit last year when the US grocery chain Kroger and Canada's Sobeys said they would close Ocado-designed customer fulfilment centres and pivot to deliveries from local stores.

Ocado, which also has a retail joint venture in the UK with Marks & Spencer, said six CFCs would be going-live over the next 2-3 years in Japan, South Korea, the US and Spain.

It added that it expected cash flow to turn positive in the second half of this year as it reported a jump in underlying core earnings to £178m in the year to November 30, up from £112m a year earlier.

The group now expected underlying cash outflow excluding closure fees of about £200m and forecast becoming full-year cash flow positive in 2026/27.

Reporting by Frank Prenesti for Sharecast.com