Britain's Ocado shares hit 13-year low on lack of progress on winning new US partners

By Sarah Young

LONDON, July 16 (Reuters) - ‌Shares in British ​technology and ​online grocery group Ocado tumbled to a 13-year low on Thursday after it failed to show tangible progress in talks to secure new U.S. partners ‌to boost its business to effectively compete with rapid delivery firms.

London-listed Ocado, ⁠which provides automated technology for distribution centres and runs its own UK online grocery business through a joint ‌venture with Marks & Spencer, is ‌trying to reposition itself after two key North American partners scaled back their tie-up.

Kroger in the U.S. and Sobeys in Canada opted to close robotic customer fulfillment centres they ​ran with Ocado, blaming weaker-than-expected demand. That has pushed Ocado's shares down 44% in the last six months.

Ocado said it was focused on winning new business in the ⁠U.S., where it was talking to multiple retailers.

Its shares were last down 14%, hitting a 13-year low.

"Our analysis of the ​Group's cash flow potential suggests management's mid-term targets appear ambitious and we question whether Ocado will be able to compete effectively with other ​in-store fulfilment options," RBC analysts said in a note.

SEARCHING ‌FOR NEW PARTNERS

Given a wider industry shift towards fulfilling online orders from stores, some analysts have said there is less need for Ocado's ⁠warehouse-based technology.

But CEO Tim Steiner said he was confident that Ocado's new solution of offering smaller store-based automation services to pick orders for grocery deliveries would bring in new business.

"I think our chances ⁠of winning new partners in the next six months are good," he told Reuters on Thursday.

The group is ​holding "multiple live engagements" and Steiner said some of the talks with new partners were "quite advanced".

One-off termination payments of £351 million from Kroger and Sobeys boosted Ocado's half-year earnings.

Stripping out those payments, Ocado's half-year adjusted earnings ‌fell 12% to £81 million ($109.63 million), but it stuck to a forecast to turn cash flow positive in the current six-month period, and ‌full-year cash flow positive next year.

Following the recent stock slump, there has been speculation about the ⁠company's leadership, but last week Ocado said ‌that Steiner, who co-founded the ​company in 2000, would stay in post for at least the next 18 months.

($1 = 0.7389 pounds)

(Reporting by Sarah Young; Editing by Muvija M and ‌Emelia Sithole-Matarise)

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