Ocado halts plans to build UK warehouses

OCADO has put on hold plans to open more robotic warehouses across Britain after the return of bricksand-mortar shopping dampened sales at its online grocery business.

The company is delaying construction of one warehouse in the North West and another in the South East as part of a “more prudent” approach to how many sites it needs.

Stephen Daintith, chief financial officer, told analysts that the plans could still change but that at present it does not intend to open the two new sites in 2024 and 2025.

He said: “It’s a pause, not a stop, but we think it’s a sensible thing to do given the surplus capacity we have today.”

The comments, which were made late last month in a cash flow seminar, were first reported by the Financial Times.

It comes weeks after the company’s online grocery partnership with Marks & Spencer, Ocado Retail, was revealed to have fallen into the red. Sales were 4.2pc lower in the six months to October than they had been a year earlier.

M&S in its results last month said that spiralling cost of living pressures meant customers were buying less per order and focusing on cheaper items. Ocado Retail posted a £700,000 loss in the six months to Oct 1.

It follows a bumpy year for Ocado, with shares down almost 60pc since the start of January. As well as jointly owning the online grocery business with M&S, Ocado also sells the technology to other retailers to create their own robotic warehouses that can pick and pack products.

Ocado had not announced a major technology deal on that part of the business for three years until last month, when it disclosed a tie-up with the South Korean retailer Lotte Shopping.

Ocado will help Lotte to build six automated ware- houses, known as customer fulfilment centres, making it the largest order after the US and Japan.