Ocado Group PLC announced plans to cut 1,000 jobs as the online grocery technology firm reported widening pre-tax losses and acknowledged a demand to reduce its cost base. The cuts, largely impacting technology and support teams, come amid ongoing challenges with partnerships in North America and a broader restructuring effort.
The job losses were revealed alongside Ocado’s full-year results, which showed group revenues increased 12% to £1.36 billion for the year ending November 30th. However, pre-tax losses at its continuing operations widened to £377.6 million, compared to £339.8 million the previous year. The company anticipates the restructuring will deliver approximately £150 million in cost savings.
The cuts follow a series of setbacks for Ocado in its international expansion. Both of its North American partners have announced the closure of facilities utilizing Ocado’s automated warehouse technology, citing lower-than-expected demand. Kroger, a US grocery chain, is shutting three Ocado-run warehouses, while Sobeys, a Canadian chain, is closing its Calgary centre.
According to a Reuters report, Sobeys’ decision to close its Calgary warehouse represents the latest blow to Ocado’s ambitions in the region. A similar report from The Guardian detailed the closure as a significant setback for the company.
Ocado CEO Tim Steiner stated the changes are intended to reflect a “lower structural cost base” that the company has been signaling in recent years. “Regrettably, this means a significant number of roles will no longer be required,” Steiner added, pledging support for affected employees.
The difficulties in North America have prompted Kroger to question its warehousing partnership with Ocado, according to reporting from Transport Topics. The future of the partnership remains uncertain as Kroger evaluates its options.
Ocado’s share price experienced a significant decline last year following the announcements from its North American partners, reflecting investor concerns about the viability of its international strategy.
