Ocado is preparing plans that could see up to 1,000 job cuts as part of renewed cost containment after a difficult year for its automated warehouse technology business.
Up to 5 percent of the group’s global workforce could be affected, according to people familiar with the discussions, although discussions are still at an early stage and no final decision has been made. An announcement could come later this month.
The bulk of the redundancies are expected to take place at Ocado’s UK headquarters, with technology functions likely to be affected alongside back-office functions such as legal, finance and human resources.
The proposed cuts come ahead of Ocado’s full-year results release on February 26, after the group reiterated last month that it was targeting positive cash flow in the next financial year, “underpinned by strict cost and capital discipline”.
Last year, Ocado announced it would cut around 500 jobs in technology and finance as it cut spending on research and development. This was followed by around 1,000 group-wide layoffs in 2023 and 2024.
Founded in 2000 by three former Goldman Sachs bankers, Ocado has pivoted its business to selling robotic warehouse systems to global grocery chains, alongside its online grocery joint venture with Marks & Spencer.
But investor confidence was shaken after two major North American partners announced plans to close a number of Ocado’s automated warehouses, known as customer fulfillment centers (CFCs), citing concerns about costs and efficiency.
Shares in the FTSE 250 group have fallen by almost a third in the past year. In November, US supermarket giant Kroger announced it would close three CFCs, briefly pushing Ocado’s share price back towards the 180p level at which it hovered in 2010.
This was followed late last month by Sobeys, which announced plans to close a CFC in Calgary, Alberta, citing slower-than-expected growth in online grocery shopping and the limited size of the regional market.
Although Ocado will receive hundreds of millions of pounds in compensation over the closures, analysts warn the setbacks could undermine its ability to secure new international partnerships. Mutual exclusivity agreements with most retail partners expired in December, raising questions about the long-term pipeline of its technology.
Ocado founder and CEO Tim Steiner has previously described the company as the “Tesla of the grocery business”. Despite its technological ambitions, the group has not yet made a profit. Pre-tax losses fell slightly to £374.5 million last year, down from £393.6 million in 2024.
In a statement, Ocado said: “We regularly review our operations to ensure we are set up for long-term success. When decisions are made that affect our employees, we aim to communicate directly with them and ensure they are supported throughout.”
The coming weeks are likely to be closely watched by investors and employees as Ocado looks to stabilize its business and prove it can turn cutting-edge automation into sustainable financial returns.
