// Ocado halts expansion plans as online grocery demand subsides
// The construction of automated distribution centres scheduled to open in 2024 and 2025 will be delayed
Ocado is halting its expansion plans as the demand for online grocery slows down.
The online grocer informed investors of its plan and that the construction of more automated distribution centres scheduled to open in 2024 and 2025 would be delayed.
Ocado’s chief financial officer, Stephen Daintith said the retailer has taken the decision to pause the north-west and south-east CFCs, Financial Times reported.
This means Ocado Retail, which has a joint venture with Marks and Spencer, will now reach £3.9 billion in sales in the medium term, rather than the £4.5 billion previously planned. Its sales last year were £2.3 billion.
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“That may change, it’s a pause not a stop, but we think it’s a sensible thing to do given the surplus capacity we have today,” Daintith said.
Ocado has already warned it may not accelerate a capacity expansion programme after its existing facilities could not be ramped up in time to benefit from the demand during Covid-19.
Ocado expects sales to fall this year for the first time in its history, despite opening new warehouses in Essex, Bristol and Luton.
The group reiterated that it did not intend to sell its half-share in Ocado Retail to M&S to raise funds.
“That is not an option we are seriously considering,” said Daintith. “Right now at the reduced margins . . . would not be a sensible time to sell that business.”
