Jan 29 (Reuters) - Ocado, the British technology and online grocery group, said on Thursday its Canadian supermarket partner Sobeys has decided to close its robotic warehouse in Calgary, dealing another blow to the Ocado business model.
The planned closure of the Calgary customer fulfilment centre (CFC) was blamed on the Alberta grocery e-commerce market's size and the rate of expansion being slower than originally anticipated.
It follows last year's move by U.S. grocer Kroger, Ocado's biggest partner, to close three automated warehouses, which hammered Ocado's shares.
The stock was down 7% in early trading, taking year-on-year losses to 24%.
The group had a stock market value of 21.7 billion pounds during the COVID pandemic in 2020, briefly overtaking UK industry leader Tesco, but is now valued at about 2 billion pounds.
Ocado said Sobeys' two other CFCs in Canada, in the Greater Toronto and Montreal areas, are seeing good progress and will remain open. Ocado is deploying new technology to those facilities to support same-day and short-lead time orders.
A planned CFC in the Vancouver area remains "paused".
"We have taken a pragmatic approach to refining the network and placing our partnership on the right footing to secure long-term, sustainable growth in the Canadian market," said Ocado CEO Tim Steiner.
OCADO SEEKS NEW PARTNERS AS EXCLUSIVITY DEALS END
Last month, Ocado said exclusivity arrangements in the majority of its markets rolled off at the end of 2025, enabling it to sign up more partners.
Ocado expects to receive compensation during its current financial year of 18 million pounds ($25 million) for the closure of the Calgary CFC. It expects the closure to reduce fee revenue by 7 million pounds in its 2025/26 year.
Ocado also reaffirmed its priority of turning cash flow positive during its 2025/26 year.
(Reporting by Ankita Bora in Bengaluru and James Davey in London; Editing by Rashmi Aich and Sarah Young)
By James Davey and Ankita Bora
