Ocado Group PLC – Market Impact of Kroger’s Warehouse Closures

Ocado Group PLC shares fell sharply on 18 November 2025 following the announcement by its largest U.S. partner, Kroger Co., that it would shut three automated fulfillment centres. The decision was reported to generate an impairment charge of approximately $2.6 billion for Kroger, prompting a reassessment of the financial viability of the shared warehouse network that Ocado supplies.

Immediate Share‑Price Reaction

  • Price Movement: On Tuesday, the stock dropped more than 20 % in after‑hours trading, falling from a close of £217.8 to a low of around £173.
  • Volume: Trading volume surged, reflecting heightened investor concern over the loss of key revenue streams tied to Kroger’s operations.
  • Market Context: The decline occurred amid a broader sell‑off in the FTSE 100, which was down 1.2 % at midday.

Kroger’s Strategic Shift

Kroger’s announcement detailed a move toward expanding partnerships with third‑party delivery providers and a reduction in its own e‑commerce fulfillment footprint. The company projected the impairment as a one‑off charge that would not recur in future periods. This shift directly reduces the volume of orders routed to Ocado’s robotic warehouse technology.

Implications for Ocado

  • Revenue Impact: The closure of three warehouses removes a significant portion of Ocado’s contract‑based revenue from the U.S. market, potentially reducing annual earnings by a noticeable margin.
  • Profitability Metrics: With a current price‑earnings ratio of –5.31, the company’s valuation already reflects expectations of negative earnings, which may worsen if Kroger’s contraction persists.
  • Strategic Response: Ocado’s board, which recently reappointed Deloitte as external auditor and saw the retirement of board member Emma Lloyd, may need to reassess its growth strategy and client diversification to mitigate concentration risk.

Broader Market Reaction

The drop in Ocado’s share price contributed to the overall decline of the FTSE 100, which fell by 1.25 % to 9 554.95 points during after‑hours trading. Market participants noted the potential ripple effects on other technology and logistics firms exposed to the U.S. grocery sector.

Conclusion

The closure of three Kroger automated warehouses represents a significant challenge for Ocado Group PLC. The company’s reliance on a single large client in the U.S. market has amplified the impact of this strategic shift. Investors will likely monitor subsequent financial reports for evidence of revenue adjustments and any counterbalancing initiatives undertaken by Ocado to diversify its client base.