Ocado Group announced plans to cut approximately 1,000 jobs, roughly 5% of its global workforce, on Thursday, as the technology and online grocery company seeks to reduce costs. The cuts will primarily affect roles in technology and support teams, according to statements released by the company and reported by multiple news outlets.
The restructuring comes as Ocado faces challenges in its North American expansion, with both Kroger and Sobeys recently announcing the closure of Ocado-run warehouses due to lower-than-expected demand. Kroger is shutting three warehouses, while Sobeys is closing one in Calgary. These setbacks have contributed to widening pre-tax losses, which reached £377.6 million for the year ending November 30, compared to £339.8 million the previous year, despite a 12% increase in group revenues to £1.36 billion.
Ocado CEO Tim Steiner stated that a “significant number” of roles would no longer be needed as part of the restructuring, adding that the changes would “reflect the lower structural cost base that we have signalled over recent years.” Approximately two-thirds of the job losses are expected to occur in the UK, with the majority of those impacting the company’s headquarters in Hatfield, Hertfordshire.
The company aims to achieve £150 million in cost savings through the restructuring, which includes scaling back research and development efforts. Ocado also plans to merge its Ocado Solutions and Ocado Intelligent Automation divisions into a single unit. This follows a previous reduction of 500 technology roles last year, attributed to increased employ of artificial intelligence in research and engineering.
Shares in Ocado fell by more than 7% following the announcement, continuing a downward trend from the previous year. Chris Beauchamp, chief market analyst at IG, suggested that Ocado had lost its early advantage in the grocery delivery market, overtaken by larger, more established competitors.
The job cuts do not affect staff involved in Ocado’s retail operations, including its joint venture with Marks & Spencer. The company currently employs around 20,000 people worldwide.
