Ocado shares fell to their lowest level in more than a decade after a key US partner said it was closing three of its robotic warehouses.
Kroger, which operates supermarkets and department stores in the US, said it will shut sites in Wisconsin, Maryland and Florida in January.
This will cost Ocado around £38million, the troubled UK firm confirmed, sending shares down by as much as 24 per cent at one stage.
The stock later closed down 17.4 per cent, or 37.9p, at 179.9p – its lowest level since 2013.
The slump came two months after Kroger, which has been working with Ocado since 2018, said it needed to take a ‘long hard look’ at its warehouses.
While Ocado runs an online supermarket via a joint venture with Marks & Spencer in Britain, a large slice of its value is driven by the sale of its cutting-edge warehouse technology to retailers around the world.
Closures: Ocado’s US partner Kroger said it will shut three robotic warehouses in Wisconsin, Maryland and Florida in January
But yesterday Kroger said it has found ‘opportunities to optimise’ its warehouse network and was expanding its work with delivery firms DoorDash, Instacart and Uber Eats.
It also said it was ‘monitoring’ its remaining five warehouses, giving rise to speculation of further closures.
The update was ‘a smelling-salt moment’ for Ocado, according to Shore Capital analyst Clive Black, who said he had expected Kroger to halt new openings but not carry out closures.
He added: ‘To be clear, Kroger states that the closure of the automated fulfilment network is because they did simply not meet financial expectations, which we see as a devastating blow to the credibility of the Ocado Group proposition.’
Ocado said it would receive compensation of around £190million for closing the sites.
A spokesman said the firm ‘continues to engage with Kroger on these and other matters, and expects significant growth in the US market’.
The pair had planned to build 20 robotic customer fulfilment centres across the US, but the roll-out has been slower than expected.
Neither firm would comment on whether plans for two more in North Carolina and Arizona were still on.
The dramatic slump may give rise to chatter that the group should consider splitting its grocery and tech divisions.
Ocado Retail, the tech group’s joint venture with M&S, has been increasing market share lately.
Sales rose 15.9 per cent over the three months to November 2, with business boosted by sales of M&S products.
Ocado was founded in 2000 by Tim Steiner, Jason Gissing and Jonathan Faiman, all ex-Goldman Sachs bankers.
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