Ocado shares jump as Kroger partnership details emerge

Ocado shares

Ocado welcomed a boost in its shares after the online grocer revealed the details of its partnership with US retailer Kroger, several months after it was first announced.

Ocado has signed service and operational terms with Kroger, which will see Ocado provide the technology for grocery deliveries in the US.

Under the terms of the agreement, Kroger will order 20 fulfilment centres during the first three years, the first three of which will be ordered by the end of this year.

As with recent deals with other retailers, Ocado will install and maintain modules of mechanical handling equipment sufficient to provide an agreed level of throughput.

The cost to Ocado for the first three centres is expected to be about £90 million, which the British firm said it had sufficient funds to cover.

Kroger’s customer fulfilment centres is slated to go live within around two years of each order being placed.

The US supermarket chain, which trades from 2800 stores across the country and serves nine million customers per day, will provide further details on the location of the first three customer fulfilment centres in the coming weeks.

News of the partnership details prompted shares in Ocado to rise as much as eight per cent in morning trading today.

Ocado has been riding a wave of growth since it struck a string of international partnerships in the past year or so, including one with Swedish supermarket group ICA, in France with supermarket giant Groupe Casino and another in Canada with Sobeys.

Alex Tosolini, Kroger’s senior vice president of business development, said: “This is a significant step toward both solidifying our partnership with Ocado and redefining the Kroger customer experience.

“The alliance will bring to the US Ocado’s unparalleled innovation and technologies.”

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