Robots pick products in the Ocado Group distribution center in Luton, U.K. (Chris Ratcliffe/Bloomberg)
December 5, 2025 9:06 AM, EST
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Ocado Group Plc will receive a one-time cash payment of $350 million from Kroger Co., more than previously announced, after the U.S. grocer decided to close three automated warehouses and scaled back plans for a wider rollout.
Kroger, the biggest customer for U.K.-based Ocado’s warehouse technology with eight fulfillment centers, announced the closures last month, saying its network was falling short of financial expectations. The grocer is taking a $2.6 billion impairment as it shifts toward completing online orders from its store network — rather than the Ocado warehouses — in some areas.
Ocado said Dec. 5 it will continue to work with Kroger on its five remaining sites, with a sixth in Phoenix due to open next year. A fulfillment center planned for Charlotte, N.C., won’t open. The payment includes $250 million already announced by Ocado, and will be paid in January. Ocado also reaffirmed its priority of turning cash flow positive during its 2026 financial year on continued growth and “rigorous cost and capital discipline.”
The shares climbed as much as 16% in early London trading, the biggest intraday gain since July. The stock is still down by about a third this year.
READ MORE: Kroger Cuts Guidance as Shoppers Get Choosy About Spending
Kroger’s decision left their partnership, which began in 2018 and was expected to reach 20 warehouses, in limbo. Ocado CEO Tim Steiner has previously said the company could become the “Tesla of grocery,” but has struggled to show the capital-intensive technology is worth the investment.
Ocado’s other deals with grocers include Aeon of Japan, France’s Casino, Coles in Australia and Canada’s Sobeys. But Kroger was key to its sales pitch. It is not clear when an exclusivity deal with Kroger will end, though Steiner indicated Ocado sees more growth potential in the U.S.
Still, it follows a string of setbacks for Ocado, which has been selling its warehouse technology to power online grocery shopping since it was founded in 2000. Like Kroger, British supermarket Morrisons also said last year it would reduce its use of Ocado’s U.K. warehouses in favor of completing orders in its stores, where it uses Ocado’s in-store software.
Kroger ranks No. 31 on the Transport Topics Top 100 list of the largest private carriers in North America, and No. 3 on the TT grocery list.
