Ocado Group PLC (LSE:OCDO) shares fell 3% after UK grocery partner Morrisons deciced to no longer take deliveries from the robot-run warehouse in Erith, London.
Morrisons will rather build volumes from a second Ocado distribution site, Dordon, and expand use of the grocery technology firm’s artificial intelligence-powered online network.
“As Ocado Retail moves towards full utilisation of existing capacity, this decision enables a helpful option to provide it with further short-term growth, without an expectation for additional capex,” Ocado chief executive Tim Steiner commented in a statement.
Morrisons, which has partnered with Ocado since 2013, said the move would have no impact on customers and that deliveries would continue across the country.
Ocado added the decision offered an “attractive option” to provide extra capacity to its joint venture with Marks & Spencer, Ocado Retail.
Analysts at AJ Bell said: "The ground beneath Ocado’s feet continues to crumble. Following the decision by several clients in the US and Canada to scale back expansion plans involving Ocado’s facilities, setbacks have now spread to the UK."
They said Morrisons decision to move from sharing two Ocado fulfilment centres with the Marks & Spencer/Ocado joint venture to only one of the sites, means the Bradford-based grocer is "going to rely more on in-store fulfilment".
** Update: Adds price, comment **