Despite slowdown Ocado upbeat on long-term Kroger site roll-out

By James Davey

LONDON (Reuters) - Ocado, the British online supermarket and technology group, is confident its U.S. grocery partner Kroger will eventually open "a significant number" of automated warehouses despite a slowdown in the roll-out of sites, Ocado's boss said.

Ocado struck a deal with Kroger in 2018 to help the U.S firm ratchet-up its delivery business with the construction of robotic warehouses.

The initial deal saw Kroger identify 20 sites to build automated warehouses, or customer fulfilment centres (CFCs) as Ocado calls them, in the United States, making the group Ocado's most important partner.

However, so far only eight sites have gone live, with a further two now not due to open in Charlotte and Phoenix until early in Ocado's 2025-26 financial year as additional freezer technology is added to the sites.

"I expect in the long term we will see a significant number of warehouses and modules live in the U.S.," Ocado CEO Tim Steiner told reporters on Thursday after the group reported annual results that sent its shares sharply lower.

"I still believe that the U.S. is an enormous opportunity for the group and at some point in the future we'll look back and go 'wasn't it challenging for a few years' and we'll see enormous growth," he said.

Steiner said the U.S. consumer was increasingly attracted to online grocery delivery and noted that in markets where Kroger had opened sites it had seen strong sales growth despite limited marketing.

The CEO also noted that the exclusivity element of its deal with Kroger is conditional on growth.

"If we found ourselves not able to do that, we obviously would be able to operate with other partners."

Steiner also said that to reduce costs Ocado would cut some jobs, mainly in research and development areas. He said the job losses would be a "low single-digit percentage" of a global workforce of about 20,000.

(Reporting by James Davey; editing by David Evans)