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Ocado said its Canadian partner Sobeys has decided to close its automated grocery warehouse in Calgary due to slower growth in Alberta's online grocery market. The move follows similar closures by Ocado's US partner Kroger and adds to pressure on Ocado's business model. While warehouses in Toronto and Montreal will continue operating, plans for Vancouver remain paused. Ocado expects compensation of GBP 18 million for the closure but anticipates a GBP 7 million hit to future fee revenue, while maintaining its focus on achieving positive cash flow.
Ocado, the UK-based online grocery and technology group, has said its Canadian supermarket partner Sobeys has decided to shut its robotic warehouse in Calgary, adding pressure on Ocado's long-term business model. Advertisement
The closure of the Calgary customer fulfilment centre was attributed to slower-than-expected growth in Alberta's online grocery market. Ocado said the size of the local e-commerce market and the pace of adoption had not developed as initially projected, making the facility unviable.
This development follows similar setbacks in the United States, where Kroger, Ocado's largest partner, closed three automated warehouses in the past year. Those closures had already raised questions around the scalability of Ocado's automated fulfilment model across markets with uneven online grocery demand.
Following the update, Ocado's shares fell around 7 percent in early trade, extending the stock's year-on-year decline to about 24 percent. The company's market value has fallen sharply from its pandemic-era peak in 2020, when it was valued at around GBP 21.7 billion and briefly overtook Tesco, to roughly GBP 2 billion now.
Ocado clarified that Sobeys other automated warehouses in the Greater Toronto and Montreal regions continue to perform well and will remain operational. The company is rolling out upgraded technology at these sites to support faster delivery windows, including same-day and short lead-time orders. However, plans for a similar facility in the Vancouver region remain on hold.
Ocado's chief executive said the company had taken a practical approach to reshaping the Canadian network to ensure the partnership is positioned for long-term and sustainable growth.
Separately, Ocado reiterated that exclusivity agreements in most of its markets ended at the close of 2025, allowing it to pursue additional retail partners globally. The company expects to receive GBP 18 million in compensation during the current financial year linked to the Calgary closure. It also expects the shutdown to reduce fee income by about GBP 7 million in the 2025-26 financial year.
Ocado reaffirmed that improving cash flow remains a key priority, with the group targeting positive cash generation during the 2025-26 period.
Source Reuters
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