Ocado is set to receive $350m in compensation next month from American retailer, Kroger, after it announced it will close three customer fulfilment centres (CFC) in the US in 2026.

The British grocery retailer stated that the closures will reduce its 2026 fee revenue by around $50m.

The one-off payment will also cover Kroger’s decision to not to go live with a previously announced CFC in Charlotte, North Carolina.

The companies signed a partnership in 2018 for Kroger to build the equivalent of 20 CFC across the US.

The US firm also expanded the partnership with the grocery retailer last year by rolling out automated technologies across its CFC networks and future projects.

While Kroger is optimising its CFC network through these closures, both Ocado and Kroger continue to work together across five live CFCs across the US, supporting progress in operational efficiency, volume growth and increasing same availability.

Chief executive officer at Ocado, Tim Steiner, said: "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."

"Our partners around the world have already deployed a wide range of these fulfilment technologies to great effect, enabling them to address a wide spectrum of geographies, population densities and online shopping missions, underpinned by Ocado's world leading expertise and R&D capabilities. We remain excited about the opportunity for Ocado's evolving products in the US market."

Investment director at AJ Bell, Russ Mould, stated that the closure and cancellation of the CFCs may have "soured" the relationship between the two firms.

He concluded: "An enhanced compensation payment does at least take the edge off Kroger’s reduced use of Ocado’s technology, as does Ocado’s reiteration of guidance for a break into positive cash flow next year.

"Having built a successful web-based delivery service for a weekly shop in the UK, Ocado’s plan to roll-out its technology with partners across the globe, effectively offering a one-stop-shop solution for online groceries, generated significant excitement, particularly during COVID.

"However, that initial buzz has not been backed up to date and despite a decent advance on today’s announcement, the shares are more than 90% below the all-time highs they saw at the height of the pandemic in 2020. While Ocado may not match the ambitions once touted for it, a more disciplined approach could still underpin a successful business."

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