Saturday, 26 May, 2018


Ocado signs exclusive United States partnership agreement with Kroger

Ocado and Kroger to build online network Used by Ocado for its own UK retail business Ocado Smart Platform is designed enables retailers to control and operate their own online business
Conrad Doyle | 17 May, 2018, 17:57

Shares in Ocado, the online grocery delivery platform, soared +44% to fresh record highs on news of another licensing agreement, this time with Kroger, which would allow the United States supermarket giant to use Ocado software to strengthen its own grocery-delivery network.

Kroger, who posted revenues of $122bn previous year, will utilise Ocado's technology to automate and process the packing of grocery orders, using smart warehouses and robots in advanced fulfilment centres.

Ocado's chief executive, Tim Steiner, described the deal as "transformative" and said it would "reshape the food retailing industry in the USA in the years to come".

Ocado said that it predicts the deal will have a neutral impact on its earnings this year.

America's largest supermarket chain, said Thursday it is spending $247 million to license exclusively the home-delivery technology of Britain's Ocado Group online supermarket.

"This is a sign that the momentum is very much behind Ocado in terms of its worldwide expansion". Ocado also works in partnership with Morrisons in the UK.

Other fund managers to have bet big on Ocado include Amit Lodha, manager of the £421 million Fidelity Global Focus fund, and Henry Boucher, who runs the £163 million Sarasin Food & Agriculture Opportunities fund.

"Shares are priced for these deals to be coming thick and fast".

Even though Ocado remains the #13 most shorted stock, according to FCA disclosure rules, this is an improvement over its position in July 2016, when it was the most shorted stock with 21.37% of shares out on loan and 16% in November 2017, before the first deal came through and the company began proving the sceptics wrong.

Analysts said e-commerce giant Amazon's (AMZN.O) move into the grocery space with its takeover of Whole Foods was the likely catalyst.

Shares in Ocado shot up by more than 50% to a record high in London after the deal was announced Thursday.

Ocado, the online supermarket chain turned technology company, has signed a major deal with USA supermarket chain Kroger that could see Ocado technology powering as many as 23 Kroger fulfilment warehouses across the US. 'Moreover, some of the nuances of this deal in particular give us a feeling that the tables have turned and Ocado now has the supplier power'.

Ocado, which already works with Sweden's ICA, Canada's Sobeys and France's Casino (as well as Morrisons in its home market), said it had agreed a contract that could see Kroger open up to 20 automated warehouses in the U.S. over the next three years.

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