16 July 2026
If you are covering Ocado's latest results, please find below a comment from Lucy Rumbold, retail analyst at Quilter Cheviot:
"Ocado’s half year results highlight what a challenging 2026 it has been for the company, with the closure of Kroger and Sobeys Customer Fulfilment Centres (CFCs) weighing on profitability. In addition, future CFCs have been delayed with Kroger’s Phoenix one pushed back two years, while Lotte’s South Korea CFC has been pushed back to 2029. These setbacks have been poorly received by the market, with the shares opening around 10% lower.
"The performance of most of Ocado’s businesses are highly dependent on partner contracts, CFC openings and utilisation levels, making closures and project delays particularly detrimental to profitability and the path to sustainable cash generation, so it is little surprise the market has taken this news so negatively.
"Management separately disclosed the impact of the closures, allowing for a like-for-like comparison. Excluding these impacts, Technology Solutions had a difficult start to the year, with revenues down 8% and earnings declining 18%. Logistics performed more strongly, with revenues up 8% and earnings rising 15%. However, given the importance of Technology Solutions to the investment case, group revenues increased by just 1% while earnings fell 11%.
"By contrast, the Retail division, which is smaller and operated as a joint venture with M&S, continued to perform well, with revenues up 15% and earnings more than doubling to £73m from £33m last year. Ultimately, the investment case remains centred on the rollout and utilisation of CFCs, with delays and closures constraining growth in the higher-value Technology Solutions business and pushing back the group's route to positive cash flow.
"Looking ahead, management expects six CFCs to go live over the next two to three years, including the recently announced Asda partnership, which is scheduled to launch in 2027. Across the network, Ocado expects to add around 10 new modules this year and a further 10 next year, towards the lower end of market expectations.
"While productivity across both CFCs and modules continues to improve, the recent closures and delays underline the execution risk within the rollout story. Given the investment case remains heavily reliant on new site openings, utilisation growth and partner commitment, we believe the risk of further delays or closures cannot be dismissed."
