Ocado shares have dropped by 17 per cent after US supermarket Kroger announced plans to close three warehouses using the company’s technology.

The company said that it has decided to shut the warehouses because its automated fulfilment network has not met financial expectations.

The closures will incur impairment and related charges in the third fiscal quarter of 2025 of approximately $2.6 billion.

The move forms part of a wider update to the grocer's e-commerce plan, which includes expanding existing relationships with Instacart, DoorDash, and Uber Eats.

The strategy aims to improve e-commerce profitability by approximately $400 million in 2026.

Kroger expects the closures to have a neutral effect on its identical sales without fuel.

The three warehouses, based in Frederick, Pleasant Prairie, and Groveland, are expected to close in January 2026.

Ocado said that it will continue to operate customer fulfilment centres in Monroe, Dallas, Atlanta, Denver, and Detroit.

"Ocado continues to support Kroger to optimise logistics operations and drive profitable volume growth in these remaining sites, with constructive ongoing discussions around further use of Ocado's technology to support Kroger," it added.

Kroger is one of the world’s largest retailers, with nearly half a million staff across 2,800 stores in the US.

It operates two dozen grocery retail brands, as well as 34 manufacturing and 44 distribution locations.

Last July, the company rolled out a range of new Ocado-developed automated technologies across its customer fulfilment centre network.

The technologies included proprietary Ocado technology, such as its On-Grid Robotic Pick (OGRP) and Automated Frameload (AFL.)

The rollout marked an expansion of Kroger's existing partnership between the two companies, after having already launched robotic warehouses in the US.

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