Finance
Ocado to receive $350 million payout as Kroger shuts robotic warehouses
Published by Global Banking and Finance Review
Posted on December 8, 2025
2 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on December 8, 2025
2 min readLast updated: January 20, 2026
Ocado will receive $350M from Kroger due to warehouse closures, impacting future fees. Ocado's U.S. strategy remains dynamic.
By James Davey and Yadarisa Shabong
Dec 5 (Reuters) - Britain's Ocado will receive a $350 million one-off payment from partner Kroger after the U.S. grocer opted to shut three robotic warehouses and scrap plans for another facility, the technology group said on Friday.
Shares in Ocado were up 6% at 0942 GMT, paring 2025 losses to 36%. The stock had plunged 17% on November 18 after Kroger reset its grocery e-commerce strategy, dealing a major blow to the Ocado investment story.
Kroger said the warehouses it built with Ocado at Frederick in Maryland, Pleasant Prairie in Wisconsin and Groveland in Florida would close in January.
On Friday, Ocado said Kroger had also decided not to proceed with a planned warehouse in Charlotte, North Carolina, that was due to start operating in 2026.
However, another site in Phoenix, Arizona, also due to open next year, will proceed and will include Ocado's new "AutoFreezer" technology.
Ocado's initial deal with Kroger in 2018 saw it identify 20 U.S. sites to build robotic warehouses, making the group Ocado's most important partner. However, so far, only eight have gone live, including the three slated for closure.
Kroger plans instead to boost its presence in quick grocery delivery through expanded relationships with delivery firms Instacart, DoorDash and Uber Eats.
The $350 million compensation payment to be made in January 2026 reflects the loss to Ocado of future capacity fees for affected sites.
The closure of the three live sites will reduce Ocado's fee revenue in fiscal 2026 by about $50 million.
Despite the closures, Ocado CEO Tim Steiner said the group remained "excited about the opportunity for Ocado's evolving products in the U.S. market".
He highlighted that Ocado was also offering store based automation "to support 'pick up' and immediacy."
"Today shows the relationship with Kroger is ongoing (and expanding), and flags, once again, that Ocado's technology is important if deployed in the right way," Peel Hunt analysts said.
Ocado also reconfirmed its priority of turning cash-flow positive during 2026, driven by growth in live and new sites, and underpinned by cost and capital discipline.
Peel Hunt analysts said that was "a strong signal for its future."
(Reporting by Yadarisa Shabong in Bengaluru and James Davey in London. Editing by Emelia Sithole-Matarise and Mark Potter)
Compensation refers to the payment or benefits provided to an individual or organization in exchange for services or as a result of a contractual agreement. In this context, it refers to the $350 million payment to Ocado from Kroger.
A robotic warehouse is a facility that uses automated systems and robots to manage inventory, fulfill orders, and streamline logistics processes. This technology enhances efficiency and reduces operational costs.
E-commerce refers to the buying and selling of goods and services over the internet. It includes various online transactions and has become a significant part of the retail industry.
Capacity fees are charges that a company pays for the ability to use a certain amount of resources or services, such as warehouse space or technology, regardless of whether they are fully utilized.
Quick grocery delivery is a service that allows customers to order groceries online and receive them at their doorstep within a short time frame, often within hours. It is becoming increasingly popular in urban areas.
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