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Ocado in Talks with New US Partners After Kroger, Sobeys Scale-Back
Summary
British grocery technology firm Ocado is in discussions with multiple potential U.S. retailers after recent setbacks with major partners. The company reaffirmed its cash flow guidance despite a drop in underlying half-year earnings.
British online grocery and technology group Ocado said it is engaged in talks with multiple potential retail partners in the United States as it seeks to expand its business following recent operational scale-backs by key clients. The announcement came as the company reported half-year earnings and maintained its forecast to become cash flow positive.
Seeking US Growth
Ocado stated it is holding "multiple live engagements" with U.S. retailers, offering what it described as "significantly evolved solutions." This strategic push follows announcements by U.S. partner Kroger and Canadian partner Sobeys that they would close some of their robotic customer fulfillment centers, citing weaker-than-expected demand.
The news from its partners has weighed heavily on investor sentiment, contributing to a 36% decline in Ocado's London-listed shares over the last six months. Securing new agreements in the crucial U.S. market is seen as a key step to rebuilding confidence in its technology-licensing model.
AdHalf-Year Financials
The company's latest half-year earnings report was significantly boosted by one-off termination fees from Kroger and Sobeys. When these payments are excluded, Ocado's adjusted earnings for the period fell 12% to £81 million ($109.63 million), according to a Reuters report.
Despite the decline in underlying profit, Ocado reaffirmed its financial targets. The company reiterated its forecast to turn cash flow positive in the current six-month period and to be cash flow positive for the full year in the next fiscal year.
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