Kroger agreed to pay Ocado $350 million to close three robot warehouses and scrap a planned fourth. The doors close this month.

From the archive. First announced by Ocado, December 2025. Where it stands now: Scaled back, as of July 2026, Ocado half-year results, Jul. 16, 2026. Why I saved this: Kroger agreed to pay Ocado $350 million to close three sites and scrap a planned fourth in Charlotte. That number shows how costly it is to unwind an automation partnership.

Previously

On Nov. 18, Kroger said it would close three of the robot-run grocery warehouses it built with Ocado, in Pleasant Prairie, Wis.; Frederick, Md.; and Groveland, Fla., in January. It expected about $2.6 billion in charges and said the network was "not meeting financial expectations." State notices covered more than 1,600 jobs in Florida and Wisconsin. Ocado said it expected more than $250 million in compensation.

January 2026 — Kroger, the Cincinnati-based grocery chain, has run Ocado's robot warehouses on online grocery orders since 2021, and this month it shuts three of them. Here's what changed since Part 1 (November 2025), what it cost, and what went wrong.

Cost and outcome (as of January 2026)

Charge: $2.585 billion before tax, $1.968 billion after tax, in the quarter ended Nov. 8, 2025. (Kroger Q3 release, 10-Q)
Per share: $3.00 of loss per share from the charge; Kroger posted a third-quarter loss of $2.02 a share. (Kroger Q3 release)
Paid to Ocado: $350 million one-time cash payment, due in January 2026, "principally in lieu of future capacity fees." (Ocado)
Sites: Three close in January; Charlotte, N.C., cancelled; five stay open. (Ocado)
Jobs: 1,403 in Florida, employment ending Feb. 1 (FOX 35); 211 in Pleasant Prairie (USA Today).
Kroger's target: A profitable eCommerce business in 2026. (Kroger Q3 release)

The settlement

On Dec. 5, Ocado said the two companies had agreed on a one-time cash payment of $350 million, to be paid during January 2026, "principally in lieu of future capacity fees." Capacity fees are what Kroger paid Ocado for the robot capacity in each site. The payment covers the three closures and Kroger's decision not to go ahead with Charlotte, one of two new sites due to open in 2026.

That's up to $100 million above the "more than $250 million" floor Ocado had flagged in November. Ocado still expects to lose about $50 million in fees in its 2026 fiscal year.

The charge

Kroger's third-quarter release, on Dec. 4, said results included "$2.6 billion in previously announced impairment and related charges" for the automated network. An impairment is an accounting write-down: the company admits the assets are worth less than it paid.

The 10-Q, filed Dec. 12, gives an exact figure: $2.585 billion before tax, or $1.968 billion after tax. It includes about $350 million in cash owed to Ocado. The filing describes the network as "not meeting operational or financial expectations." November's release had said only "financial." Kroger also posted a third-quarter loss of $2.02 a share, driven by the charge.

Ron Sargent, Kroger's chairman and interim CEO, said the company had finished its strategic review, "which we expect will make our eCommerce business profitable in 2026." eCommerce sales rose 17% in the quarter, Kroger said.

What's changed

The charge is now firm at $2.585 billion. The Ocado payment came in higher than flagged, at $350 million. Charlotte, which hadn't opened, is cancelled.

Ocado's December filing also sounds more upbeat about the five remaining sites, in Monroe, Ohio; Dallas; Atlanta; Denver; and Detroit. It says they're seeing "a significant improvement in financial performance." Kroger ordered more capacity at Detroit for 2026, and a planned Phoenix site will be the first to use Ocado's AutoFreezer, its automated frozen-food system.

So the rollback isn't an exit. Kroger is shrinking the network to the sites where it says demand is dense enough, and paying to get out of the rest.

Why it matters for operators

The settlement shows what walking away from a big automation contract costs. The fees Kroger agreed to pay for robot capacity didn't go away when it closed the buildings. It paid them up front instead, on top of writing down buildings and equipment. Anyone signing a long automation deal should know what an early exit costs before signing.

What went wrong

The network missed its numbers. Kroger's 10-Q says it was "not meeting operational or financial expectations."
Exiting cost more than first flagged. $350 million to Ocado, against Ocado's November estimate of more than $250 million.
A site was cancelled before it opened. Charlotte won't be built.
People lose jobs. Florida notices set Feb. 1 as the last day for 1,403 workers. No count for Frederick, Md., has been reported.
What we don't know yet: what happens to the three buildings and their robots, and whether Kroger keeps its online customers in those markets.

Our follow-up question for Kroger

When the three sites close, how many of their online customers will Kroger serve from stores instead, and at what cost per order?

Sources

Kroger, “Kroger Reports Third Quarter 2025 Results and Updates Guidance for 2025,” Dec. 4, 2025. ir.kroger.com
Kroger Form 10-Q, quarter ended Nov. 8, 2025 (SEC, filed Dec. 12, 2025). sec.gov
Ocado Group, “Update on Kroger Partnership,” RNS, Dec. 5, 2025. lse.co.uk
Ocado Group, “Update on Kroger Partnership,” RNS, Nov. 18, 2025. data.fca.org.uk
FOX 35 Orlando, Kroger Florida fulfillment center closures, Nov. 19, 2025. fox35orlando.com
James Powel, *USA Today*, Nov. 18, 2025. usatoday.com
Kroger, “Kroger Announces Resignation of CEO Rodney McMullen,” March 3, 2025 (names Ron Sargent chairman and interim CEO). ir.kroger.com
Ocado Group, half-year results for the 26 weeks ended May 31, 2026, July 16, 2026. rns-pdf.londonstockexchange.com
Earlier in this series: Part 1. /case/kroger-ocado-closures-announced

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