Ocado Secures $350m Payment from Kroger Amid CFC Network Changes

Ocado Group plc (LON: OCDO) and Kroger have reached an agreement resulting in a one-off cash payment of $350 million to Ocado.

The payment compensates Ocado for Kroger's strategic decision to optimize its Customer Fulfillment Center (CFC) network. This development reflects Kroger's planned closure of three CFCs in January 2026 and its decision not to proceed with the Charlotte, North Carolina CFC, initially slated for launch in 2026.

This cash injection is principally in lieu of future capacity fees for the impacted CFCs. Ocado anticipates a reduction of approximately $50 million in fee revenue for fiscal year 2026 due to the closure of the three live sites.

Ocado and Kroger will continue their collaboration across the five operational CFCs located in Monroe (OH), Dallas (TX), Atlanta (GA), Denver (CO), and Detroit (MI).

Ocado's teams remain integrated within these sites, focusing on enhancing operational efficiency, driving volume growth, and improving same-day availability. These efforts have yielded substantial improvements in financial performance within the operational CFCs.

The rollout of Ocado's ‘Re:imagined' products is ongoing across Kroger's fulfillment network, contributing to increased productivity and network capacity. In Detroit, Kroger has expanded the site's initial capacity and ordered further capacity for utilization in 2026. The upcoming CFC in Phoenix (AZ) will feature Ocado's new AutoFreezer technology for the first time.

The $350 million payment is slated to be received by Ocado in January 2026. Despite the reduction in fee revenue from the CFC closures, Ocado reaffirms its commitment to achieving positive cash flow during fiscal year 2026. This target will be driven by continued growth in both existing and new sites, supported by disciplined cost management and capital allocation.

Tim Steiner, CEO of Ocado Group, stated, “We continue to invest significant resources to support our partners at Kroger, and to help them build on our longstanding partnership.

“Ocado's technology has evolved significantly to include both the new technologies that Kroger is currently deploying in its CFC network, as well as new fulfilment products that bring Ocado's technology to a wider range of applications, including Store Based Automation to support ‘pick up' and immediacy.”