Ocado shares fall after Morrisons ends deliveries at Erith

Morrisons is planning to end its deliveries from Ocado’s Erith warehouse, instead fulfilling orders via its own network of shops and Ocado’s other warehouse in Staffordshire.
The supermarket chain will still use Ocado’s technology when it delivers online orders from its own shops. Ocado added that the spare capacity at its Erith site in Essex could be used by Ocado Retail, the company’s joint venture with Marks & Spencer, which Ocado said would need extra capacity in the short term.
It added that subject to the conclusion of discussions with Ocado Retail, it expected the net cash impact of the move to be “broadly neutral” across 2024 and 2025.
The news concerned investors, however, and pushed its share price down by 6¾p, or 2.1 per cent, to 318¼p in mid-morning trading.
Ocado has seven warehouses, more commonly known as “customer fulfilment centres”, in the UK. The Erith centre was the site of a big fire in 2021 caused by a collision between three robots at the facility that took 100 firefighters more than 12 hours to tackle. The warehouse was also the site of a blaze in 2019 related to waste packaging.
Shares in Ocado have fallen by 47.1% over 2024, following a difficult period in which the company battled post-pandemic headwinds and its US partner Kroger delayed its expansion of fulfilment centres.
Its joint venture with Marks & Spencer has also been plagued by troubles. In February Ocado threatened legal action against its partner in the business over a payment of £190 million.
The return to in-person shopping after the pandemic damaged Ocado’s model, as did cost-of-living pressures that affected its Ocado Retail businesses.
It has since recovered, however, and the company reported sales up by 13 per cent to £1.5 billion in its first-half results for 2024. This was split between an 11 per cent increase in sales at its Ocado Retail joint venture and a 22 per cent rise in revenue in its Technology Solutions division.