UK's Ocado to cut 1,000 jobs as it aims to boost cash flows

By James Davey

LONDON, Feb 26 (Reuters) - Ocado will cut about 1,000 jobs as part of a cost-saving drive aimed at helping the British technology and online grocery group turn cash-flow positive this year.

The London-listed firm, which supplies automated technology for distribution centres and runs a UK online grocery joint venture with Marks & Spencer, said the job cuts form part of a plan to lower technology and support costs by 150 million pounds ($203 million) in its 2025/26 fiscal year.

"It's about 1,000 people, it's less than 5% of our global workforce, about two thirds of those jobs are in the UK, about half of the jobs are from our R&D team," CEO Tim Steiner told Reuters on Thursday.

Ocado shares fell 10% in early trading.

The stock has slumped 36% over the last year after Ocado's North American partners - Kroger in the U.S. and Sobeys in Canada - said they would close robotic customer fulfilment centres (CFSs), blaming weaker-than-expected demand.

The moves raised fresh questions over the viability of Ocado's business model, particularly for partners whose customers are spread beyond dense urban areas.

Ocado says the expiry of exclusivity agreements in most of its overseas markets, including the U.S., allows it to seek new partners. However, analysts doubt the group can secure fresh deals given challenges with existing partners and a wider industry shift towards fulfilling online orders from stores.

The group forecast it would turn cash-flow positive in the second half of its 2025/26 year, with full-year underlying cash outflow excluding closure fees of about 200 million pounds.

It expects to be full-year cash-flow positive in 2026/27.

For the year ended November 30, Ocado reported a 59% rise in underlying earnings to 178 million pounds, on revenue up 12.1% to 1.36 billion pounds.

($1 = 0.7378 pounds)

(Reporting by James Davey. Editing by Kate Holton and Paul Sandle)