Ocado tanks as Canadian partner Sobeys pauses go-live of Vancouver CFC

(Sharecast News) - Ocado tumbled on Thursday as it said the planned go-live of North American partner Sobeys' customer fulfilment centre in Vancouver had been paused and that the two have agreed to end terms related to mutual exclusivity. The go-live of Canadian grocer Sobeys' fourth customer fulfilment centre (CFC) was originally planned for 2025. Ocado said the timeline will be under regular review and the site will be able to commission and scale quickly when required. Ocado refers to its automated warehouses at CFCs.

The company noted that its partners in North America - Kroger and Sobeys - have both announced strong growth in digital sales in their latest quarterly results.

"With Ocado Retail the fastest growing grocer in the UK today, there is clear evidence that online is returning overall to being the fastest growing channel in grocery," the company said.

"As the online channel accelerates Ocado is supporting its partners to grow volumes and expand profitably, drawing on the experience of more than 20 years operating and growing an online grocery retailer in the UK, one of the world's most competitive grocery markets."

As part of this programme, Ocado and Sobeys have decided for now to focus their joint resources on driving order and sales volumes across the current network. This currently comprises three live CFCs in major Canadian markets, across Toronto, Montreal, and Calgary, and manual fulfilment solutions in nearly 100 stores.

Ocado also announced that it had agreed to end terms related to mutual exclusivity with Sobeys.

The online supermarket and grocery technology business said its financial guidance for FY24 remains unchanged, along with its target to be cash flow positive in the mid-term.

It expects the capital expenditure related to the material handling equipment deployment for Sobeys' CFC4, originally expected to be incurred across FY24 and FY25, to be deferred.

At 1240 BST, Ocado shares were down 13.5% at 304.90p.