Ocado shares plummet as CEO announces job cuts
Shares in Ocado fell by up to 10% this morning following the company’s full-year preliminary results, where Group CEO Tim Steiner announced significant job cuts.
In its results published Thursday 26 February, the retail technology business said it plans to cut its operating costs by £150 million, with staff cuts projected to be as high as 1,000.
Following the release of the company’s results, shares tumbled from yesterday’s close above £234 to under £210 before beginning a slight recovery.
Ocado said these job cuts were a result of it ‘simplifying’ its operating model following technological optimisation and the termination of exclusivity agreements with partners in North America and other markets.
These agreements were appropriate when Ocado was a ‘first-mover’ in these markets but are not optimal for the market today, where grocery investment in e-commerce has grown substantially.
“We have largely completed a very significant phase of investment in our robotics and automation capabilities. As that development cycle concludes and we accelerate deployment of our latest products, we expect aggregate Technology and Support costs to continue reducing,” said Ocado Group CEO Tim Steiner.
“Our ongoing R&D investment will be concentrated on areas where we see the clearest path to value creation for Ocado and our partners. We are also reshaping parts of our organisation to focus our commercial strategy and simplify our operating model as we re-engage in multiple international markets, following the end of exclusivity arrangements.”
“These changes will also reflect the lower structural cost base that we have signalled over recent years,” he said.
“Regrettably, this means a significant number of roles will no longer be required. We are grateful to colleagues who are affected by these changes, and whose talent and hard work have made a lasting contribution to Ocado.”
Ocado’s group revenue grew 12.1% year-on-year to just under £1.4 billion.
The company said its core priorities for the coming year are to become cash-flow positive, to improve performance with its partners, and to ensure it is positioned to capitalise on what it believes is a ‘growing opportunity in global grocery ecommerce and logistics’.
