Ocado Announces Partnership With Kroger In The US

Marco Green
May 17, 2018

Ocado said that the aim of the partnership is to "allow Kroger to redefine the grocery customer experience in the U.S. through the adoption of the centralised, automated model of online retailing provided by the Ocado Smart Platform".

It also said that Kroger, which recorded sales of US$122bn during 2017, making it the largest grocery retail chain in the USA in terms of revenue, was best placed to retain that market-leading position.

"Ocado's unique, proprietary and industry-leading technology is set to transform the shopping experience of consumers around the world", he said.

Rodney McMullen, Kroger's chief executive, said the partnership would the grocer "redefine the food and grocery customer experience - creating value for customers and shareholders alike".

"This is a sign that the momentum is very much behind Ocado in terms of its global expansion". The deal follows on from one with Canadian grocery chain Sobeys in January.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said that as one of the most shorted stocks in the United Kingdom - where investors bet that a firm's share price will fall - Ocado's deal with Kroger was a "poke in the eye" for the hedge funds who have bet against it.

Today's share price surge has handed another boost to two star small company fund managers who have been enthusiastic backers of the stock.

Edinburgh Worldwide is the top-performing global smaller companies investment trust over the last three years, with the shares up 86%, while the Global Discovery fund has returned 55% over three years to the end of April, placing it third in its Citywire sector.

Ocado's Chief Financial Officer Duncan Tatton-Brown said the partnership was "transformational".

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

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

The Kroger deal is "an unmitigated positive in our eyes", Barclays analysts said in a research note.

Kroger and Ocado said that they are already working to identify the first three sites in 2018 for development of new, automated warehouse facilities in the USA, and they plan to identify up to a total of 20 over the first three years of the agreement.

The deal with Kroger is arguably Ocado's biggest to date and demonstrates that the company's technology push is starting to gain traction after some five years or so of pushing it.

Other reports by Click Lancashire

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