Ocado cuts 1,000 jobs in £150m cost-cutting drive after warehouse disappointments
Ocado shares plummeted as the group confirmed plans to axe 1,000 jobs as part of a £150million cost-cutting drive.Around 5 per cent of its global workforce is being cut, with two-thirds of redundancies to take place in the UK - mostly at its headquarters in Hatfield, Hertfordshire.It comes after Ocado unveiled plans last year to scale back its research and development workforce, and investors are losing patience with the group as new openings with existing partners and further technology deals have failed to materialise. Shares were down more than 10 per cent on Thursday morning in response to the news, having fallen around 90 per cent over the past five years.The UK-listed retailer sells technology to retailers to pick and dispatch online food orders from robotic warehouses. Ocado Group owns robotics warehouses used by other retailers as well as its own online grocery businessIt also runs its own grocery firm in partnership with Marks & Spencer, which has turned a corner after online grocery was hit by shoppers returning to physical shops after lockdown.Chief executive Tim Steiner hailed 'tangible progress' for the whole business, as it set out its annual results for the year ended 30 November 2025.Even though sales across the group jumped 12.1 per cent to £1.4billion, investors have been left frustrated by disappointing updates about its partnerships with major retailers across the world.In January, Ocado Canadian supermarket Sobeys would close its fulfilment centre in Calgary after expansion was ‘slower than originally anticipated' while US retail giant Kroger is also closing three of its robotic warehouses.Chris Beauchamp, chief market analyst at IG, said: ‘Ocado continues to be one of the most impressive vehicles for shareholder value destruction we have seen.’He said it has been ‘overtaken by its more pedestrian, but larger, rivals, utilising their size and reach and building on their existing business to tell a much more compelling story for investors’. 'Rather than use Ocado's technology, they have instead built their own and simply bypassed the newcomer, leaving Ocado as the great white elephant that failed to deliver,' Beauchamp added.Its technology arm, which powers its robotic warehouses, saw sales grow 13 per cent while its logistics division, which operates fulfilment centres in the UK for Ocado Retail and Morrisons, saw sales rise 11.5 per cent. On the topic of warehouse closures, Steiner said: ‘You can build the most amazing infrastructure in the world, but if nobody uses it, there's not much point in continuing to pay and operate it and keep it open.’ The business has also been impacted by different online grocery shopping habits.In the US, consumers tend to make more immediate grocery orders through delivery apps and are more likely to collect an order from a shop, Steiner said.But he said: ‘It doesn't mean that there isn't growing demand in the five warehouses that Kroger are operating from, they are all growing. This means that overall, the market is more diverse.’Ocado Retail has been a bright spot for the company, with sales rising 15.4 per cent last year.Steiner said that ‘across the UK, people are feeling some of the economic pressures,’ but suggested his supermarket business could benefit from people dining out at restaurants less frequently.AJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
Share or comment on this article:
Ocado cuts 1,000 jobs in £150m cost-cutting drive after warehouse disappointments
