Ocado Group is preparing to cut 1,000 jobs next year to accelerate a cost-cutting drive aimed at stabilizing finances and restoring investor confidence.
The cuts, equivalent to around 5 per cent of the global workforce, will have a major impact on the UK, with around two-thirds of the affected jobs located domestically. Most of the cuts are expected at the company’s headquarters in Hatfield, Hertfordshire, and will primarily impact technology and support functions.
The announcement came at the same time as Ocado’s full-year results, which showed widening losses despite revenue growth.
Chief Executive Tim Steiner said a “significant number” of jobs would no longer be needed as part of a broader restructuring to move the company toward a lower cost base.
“These changes reflect the lower structural cost base that we have signaled in recent years,” Steiner said. “Regrettably, this means that a significant number of roles are no longer needed. We will support those affected through this process.”
Ocado said the measures are expected to result in annual cost savings of around £150 million.
The group employs around 20,000 people worldwide, most of them in the UK. The job cuts are the result of a multi-year strategic realignment as the company struggles with poor performance in its international technology partnerships.
For the financial year to November 30, Ocado reported group sales of £1.36 billion, up 12 per cent on the previous year. However, pre-tax losses in continuing operations widened to £377.6 million, compared to a loss of £339.8 million a year earlier.
The company is under increasing pressure after setbacks in North America. US grocery chain Kroger confirmed it would close three automated customer fulfillment centers operated by Ocado after sales fell short of expectations. In January, Canadian retailer Sobeys announced the closure of its Calgary factory.
These developments have shaken confidence in Ocado’s technology-based global expansion model, which once positioned the company as a disruptive force in food logistics.
By midday trading, Ocado shares had fallen more than 7 per cent, continuing their sharp decline over the past 12 months.
Chris Beauchamp, chief market analyst at IG, said Ocado’s lead as a frontrunner in food delivery had waned as established supermarket chains developed their own technology.
“A company once seen as the future of supermarket delivery has seen its fortunes overtaken by its busier but larger competitors,” he said.
“Instead of using Ocado’s technology, they instead developed their own and simply bypassed the newcomer, leaving Ocado the big white elephant that couldn’t deliver.”
Traditional supermarket operators have increasingly invested in their own distribution infrastructure, leveraging scale and existing store networks rather than outsourcing to Ocado’s robotic model.
The scale of job losses has raised concerns in Hatfield, where Ocado’s headquarters was a significant local employer.
Andrew Lewin, Labor MP for Hatfield, described the cuts as “a serious setback”.
“Hatfield has been Ocado’s headquarters for many years and the people of our community have been instrumental in the company’s growth and success,” he said. “Ocado’s decision to cut hundreds of local jobs will hit hard.”
The announcement underlines wider pressures in the UK retail and grocery sector, where companies are facing rising operating costs, technological changes and cautious consumer spending.
Separately, Sainsbury’s confirmed up to 300 jobs are at risk as it restructures its technology and data departments across its supermarket and Argos operations.
Ocado, which runs its own online grocery joint venture with Marks & Spencer alongside its technology licensing division, now faces the challenge of proving that its capital-intensive robotics model can deliver sustainable returns in a more competitive and cost-sensitive environment.
The coming year will test whether aggressive cost discipline and restructuring can bring the company back to profitability – or whether further cuts are on the way.
