Ocado Group PLC (LSE:OCDO), the grocery technology company, saw its client ICA, the Swedish retailer, shut down one of its e-commerce warehouses, a move which analysts at Barclays feel could dampen sentiment surrounding the stock.
ICA, the leading grocer in Sweden, is closing a warehouse in Gothenburg as part of an alteration to its e-commerce strategy and while this won’t cause any closures of Ocado’s customer fulfilment centres (CFC) it will result in the cessation of its in-store fulfilment (ISF) software at one site.
In a company statement, the retailer said it sees “greater opportunities for growth by using the strength of ICA's business model and the local store” – a potentially negative comment for Ocado in the view of Barclays.
ICA is a relatively small partner for Ocado, using only one CFC of the group’s 25 live smart platforms, and is not expected to launch any more roll-outs of the London-listed firm’s tech, according to Barclays’ forecast.
However, analysts at the bank think “ guidance is at risk from existing customer CFC/module roll-out delays, due in part to elements of retail partners' ROI equations getting worse or at least harder to forecast.”
Barclays analysts concluded: “We expect the direct financial impact of this announcement to be negligible for Ocado (we don't know the economics behind the ISF monetisation and assume they are minor in the context of the overall contract), but think the sentiment impact is more negative.”
Ocado Group shares are down a little over 1% on Wednesday, having opened at around 500p.