Ocado Group (LON:OCDO) dropped 10% on Thursday after Canadian partner Sobeys confirmed it will shut its Calgary customer fulfilment centre.
The closure is attributed to the Alberta online grocery market being smaller than anticipated, with growth slower than expected. The Calgary site was one of three centres operated with Ocado technology.
Sobeys will continue serving customers in Ontario and Quebec through its existing Toronto and Montreal fulfilment facilities. Development of a Vancouver centre remains paused, with the timeline for opening still under review.
Ocado said the closure will generate £18 million in compensation during the current financial year and reduce fee revenue by £7 million in FY26.
Chief Executive Tim Steiner said the decision allows the partnership to adjust operations where the market has not developed as expected. He highlighted that Ocado is introducing its Swift Router technology at the remaining centres to improve same-day and short-lead-time deliveries and integrate fulfilments with third-party platforms.
The Calgary closure follows earlier setbacks in the US, where the closure of three Kroger-operated fulfilment centres last year lowered FY26 revenue by approximately $50 million (£38 million).
Ocado continues to provide in-store fulfilment technology in 87 Sobeys stores across Canada. The company reiterated its target to reach positive cash flow in FY26 and confirmed its long-term commitment to technology upgrades and partnership growth.
Ocado shares are down 26% over the past 12 months.