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Investing.com - Shares in Ocado (LON:OCDO) shed more than 15% of their value on Thursday, as investors fretted over a slow rollout of more sites for its crucial warehouse robotics business.
Although the British online grocery service derives some of revenues from a joint venture with U.K. supermarket chain Marks & Spencer, much of its performance is driven by selling warehouse technology to retail firms around the world.
Yet Kroger (NYSE:KR), Ocado’s crucial U.S. partner, has moved to decelerate folding robotic warehouses into its operations and Canadian partner Sobeys has halted the launch of a fourth warehouse -- which Ocado calls customer fulfillment centers (CFCs).
In its preliminary results for the year ended last December, Ocado said "at least 7 CFCs" are due to come online over the next three years.
Of those, only a CFC in Warsaw is set come online this year. Other CFCs in the U.S. cities of Charlotte and Phoenix are now expected "go live" early in its 2026 fiscal year, instead of in the 2024-2025 fiscal year as previously anticipated. Four more are tipped to go live in Japan and South Korea across the 2026 and 2027 financial years.
Analysts at Barclays (LON:BARC) flagged that the delay to the CFCs in the U.S. will "drive the majority of downgrades" in growth expectations for Ocado’s current year.
Still, better returns at its Marks & Spencer joint venture helped Ocado post a pretax loss of 374.5 million pounds for the 53 weeks until December 1, compared to a loss of 393.6 million pounds for the prior year.
Revenue also jumped by 14.1% to 3.2 billion pounds, topping analyst estimates, thanks to an improvement in weekly orders and active customers at the Marks & Spencer joint venture.
Adjusted earnings before interest, taxes, depreciation and amortization, Ocado’s preferred profit metric, were 153.3 million pounds, rising from 51.6 million pounds in the 2022-2023 financial year.
Ocado expects its technology solutions division to report roughly 10% revenue growth in its 2024-2025 fiscal year, along with core income margin of 20% to 25%.