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Ocado has secured a new agreement to build a large robotic warehouse for a fast-growing European retailer, providing fresh momentum to its technology solutions business after a challenging period. The automated facility is expected to become operational in 2028 and will use Ocado's latest fulfilment technology. The deal comes after the company's shares came under pressure following weak first-half results and amid changes in its partnerships in North America. The agreement also follows Ocado's recent technology partnership with Asda, reflecting its continued focus on expanding its automation business.
British technology and online grocery company Ocado has announced an agreement to build a large robotic warehouse for a fast-growing national retailer in Europe, giving a boost to its technology solutions business. While the company did not disclose the retailer's identity, it confirmed that the project will use its latest warehouse automation technology and is scheduled to become fully operational in 2028.
The new facility will be developed as a Customer Fulfilment Centre (CFC), Ocado's automated warehouse format designed to process online grocery orders using robotics and advanced fulfilment systems. According to the company, the retailer plans to transfer its existing online order volumes to the new facility soon after it becomes operational. The warehouse is expected to begin operations at slightly more than half of its designed capacity before gradually scaling up.
Ocado also clarified that the agreement is not expected to have a material financial impact during the current financial year.
The announcement comes after the company's shares had fallen to a 13-year low in the past week following weaker-than-expected first-half financial results, which disappointed investors. However, investor sentiment improved after the new agreement was announced, with Ocado's shares rising by more than 12%. Despite the recovery, the stock remains around 37% lower than its level a year ago.
Chief Executive Officer Tim Steiner said the partnership, along with the technology agreement signed with Asda earlier this year, demonstrates increasing demand for Ocado's automation solutions across its technology portfolio.
The latest agreement is part of Ocado's broader efforts to strengthen its technology business after setbacks in North America. Earlier, two of its major partners—Kroger in the United States and Sobeys in Canada—decided to close robotic customer fulfilment centres developed with Ocado, citing weaker-than-expected customer demand.
Those closures raised concerns among investors about the long-term viability of Ocado's large automated warehouse model, particularly in markets where grocery customers are spread across wider geographical areas instead of densely populated cities.
In response, Ocado has been reshaping its international strategy. With exclusivity agreements ending across most overseas markets, including the United States, the company now has greater flexibility to work with new retail partners. Alongside its traditional large fulfilment centres, it has also expanded its focus towards store-based automation technology, enabling retailers to automate online order processing directly from existing stores.
The company's strategy gained further support earlier this year when it signed a technology agreement with Asda, the United Kingdom's third-largest supermarket chain, to modernise the retailer's store-based online fulfilment operations. The newly announced European warehouse project further strengthens Ocado's efforts to expand its technology business despite recent challenges in some international markets.
Source Reuters
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