22nd Jul 2024 11:57
(Alliance News) - Ocado Group PLC unveiled a warehouse technology deal with US grocery retailer Kroger Co, easing some share price pressure on the London listing.
Ocado shares rose 8.5% to 410.40 pence each in London on Monday around midday.
The Hatfield, England-based online grocer and technology licensor called this a "significant" development of its partnership with Kroger.
Cincinnati, Ohio-based Kroger will roll out the technologies across multiple existing customer fulfilment centres across its network, as well as future CFCs.
The latest 'Re:imagined' technologies include proprietary Ocado innovations such as its on-grid robotic pick and automated frameload solutions.
Ocado said the technology is already rolling out in UK CFCs. At full capacity, OGRP is expected to pick more than 70% of its online grocery range.
Earlier this month, Ocado said Japanese retailer Aeon Next Co Ltd would upgrade its live operations using Ocado technologies including OGRP.
"Today marks another exciting milestone in our partnership with Kroger," Ocado Chief Executive Tim Steiner commented. "Our current CFCs are already helping to deliver a game-changing quality of service to their customers across the USA.
"We are excited for these latest technologies to further enhance that proposition, as well as the efficiency of Kroger's operations in live and future CFCs."
Ocado announced an exclusive US partnership with Kroger in May 2018, and an initial commitment to build capacity equivalent to 20 CFCs across the US.
In 2020, this partnership was extended to also include Ocado's in-store fulfilment solution.
Despite Monday's share price progress, Ocado has fallen around 45% in the year to date.
On the deal, Peel Hunt analysts commented: "The upgrade is beneficial for Ocado as the technology contributes to both top-line growth and margin expansion.
"This announcement, following the recent unveiling of a new CFC in Japan with AEON, shifts the negative sentiment that was building around Ocado.
"This sentiment was due to Sobeys' announcement of a delay in its CFC rollout, which followed last year’s news that Kroger would decelerate the rollout of its own CFCs."
By Eric Cunha, Alliance News news editor
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