Share of online supermarket Ocado skyrocket on US deal

17 May, 2018, 14:29 | Author: Regina Silva
  • Ocado and Kroger to build online network

The exclusive deal will see Kroger use Ocado's technology as the basis for its assault on online retailing.

In the longer term, Kroger will retain exclusivity in the United States conditional on it meeting market share targets or ordering an agreed number of CFCs per annum. As a result, the U.S. retailer will use its Smart Platform technology on an exclusive basis Stateside, in return for monthly exclusivity and consultancy fees.

He said Kroger, which had sales of $122 billion in its last fiscal year, was the grocer best-positioned to succeed in the USA sector.

Russ Mould, investment director at AJ Bell, comments: 'A USA licensing deal helps extend the astonishing momentum displayed by internet-based groceries business Ocado since the company shifted its focus from being a simple online supermarket to a technology platform provider.

Kroger will identify at least 20 sites to build new, automated warehouse facilities in the US, Tatton-Brown said, more than all of the facilities Ocado has built or is planning to build for all its other partnerships to date.

As part of the deal, Kroger will take a stake in the British company, equivalent to 5 percent of the existing share capital valued at 183 million pounds, Ocado said. It has also inked a deal with a yet-to-be named European retailer.

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

Chief executive Tim Steiner argues 'the opportunity to partner with Kroger to transform the way in which USA customers buy grocery represents a huge opportunity to redefine the grocery experience of Kroger's customers and create value for the stakeholders of both Kroger and Ocado.

Rodney McMullen, chairman and CEO of Kroger, said the retailer is on a mission to develop new customer experiences by investing in technology.

"We are actively creating a seamless digital experience for our customers. Our partnership will speed up our efforts to redefine the food and grocery customer experience, creating value for customers and shareholders alike".

Tatton-Brown said the detailed financial terms still had to be agreed, but the deal was expected to be neutral in respect to earnings in the full-year 2018.

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