Ocado Maintains Guidance
Ocado Maintains Cash Flow Target for 2027 Amid Revenue Boost, Further Delays
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Key Points
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Ocado's H1 revenue of £1.04bn was boosted by £354m of termination payments tied to Kroger and Sobeys closures; excluding these one-offs, revenue was £684m, up 1%.
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Ocado Retail's UK joint venture with Marks & Spencer delivered revenue up 15% and adjusted EBITDA of £73m, underscoring resilience in its core grocery business.
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Ocado said it is engaging with multiple U.S. retailers after Kroger and Sobeys closures, continuing to pursue new commercial partnerships in the U.S. with several 'live engagements' underway.
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Technology Solutions revenue is forecast to be around £500m for fiscal 2026, illustrating expectations for the group’s software and automation arm alongside its core grocery operations.
Ocado posted first-half revenue of £1.04 billion — a 54% jump — but the number is misleading. £354 million of that came from one-off termination payments after Kroger and Sobeys closed their robotic warehouses. Strip those out, and revenue rose just 1% to £684 million, according to The Independent.
Despite worsening cash outflows and fresh delays to automated warehouse projects, the UK grocery technology firm held firm on its promise to turn cash flow positive in the second half of 2025 and to be fully cash flow positive by fiscal 2027, AOL reported.
Termination Windfalls Mask a Thin Trading Period
Adjusted EBITDA came in at £432 million for the half. That sounds strong — but a normalised figure, stripping out the closure impacts, was just £81 million. That is down 12% year-on-year. Underlying cash outflow also widened to £147 million, showing the core business is still burning cash at a significant rate.
The termination payments from Kroger and Sobeys are one-time events. They will not repeat. That means the second half must prove Ocado can generate real cash from its operations — not just windfalls from contracts that fell apart, according to Invezz.
Ocado Retail's M&S Partnership Delivers a Bright Spot
Not everything is bleak. Ocado's UK joint venture with Marks & Spencer turned in a strong performance. Revenue rose 15% in the first half. Adjusted EBITDA for the joint venture hit £73 million. That is a big jump and shows the core grocery business in Britain is growing well, The Independent reported.
The M&S tie-up is Ocado's most stable revenue stream right now. While its international technology business struggles to sign new clients, the UK grocery arm is winning more customers and keeping costs under control.
Warehouse Delays Pile Up as U.S. Client Search Intensifies
Two more automated fulfilment centres have slipped their launch dates. Kroger's Phoenix facility will now go live in fiscal 2028 or 2029. Lotte's Seoul site in South Korea has slipped to fiscal 2029. These delays come on top of the Kroger and Sobeys closures that already rattled investor confidence, according to Yahoo Finance.
Ocado shares have fallen to a multi-year low, Invezz noted. The company says it has several "live engagements" with U.S. retailers as it hunts for new partners to replace Kroger and Sobeys. CEO Tim Steiner is targeting around £150 million in cost savings and plans to bring six robot-run warehouses online for major clients over the next two to three years.
Technology Solutions Must Carry the Group's Recovery
Ocado's software and automation arm — called Technology Solutions — is expected to bring in around £500 million in revenue for fiscal 2026. That number will be key to whether the group can hit its cash flow targets. The division licenses Ocado's warehouse robots and software to supermarkets around the world.
The big test is whether Ocado can turn interest from U.S. retailers into signed deals. Without new clients, the Technology Solutions revenue line will shrink as legacy contracts wind down. The next few months of partnership talks will be critical, The Independent reported.
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