Ocado jumps on international deal in France
Ocado said that the deal will see it construct an automated warehouse, or customer fulfilment centre.
Shares in online grocer Ocado rocketed after it announced a long-awaited international partnership, signing a deal with French supermarket giant Groupe Casino.
Ocado said the deal will see it construct an automated warehouse, or customer fulfilment centre, that will serve the Greater Paris area, as well as the Normandie and Hauts de France regions.
Groupe Casino will pay Ocado upfront and ongoing fees as part of the deal.
Investors warmed to the news, with shares advancing 24% in morning trading to 318p.
FTSE 250-listed Ocado announced its first international deal in early June, although it has so far kept the customer anonymous.
The online firm has been under pressure over its delay in striking a deal after missing a self-imposed deadline of the end of 2015 to expand overseas.
Ocado said it expects the Groupe Casino tie-up, which will see it develop what it calls “Ocado Smart Platform”, to be earnings neutral in 2018.
Groupe Casino sub-brand Monoprix.fr will be the first to benefit from the deal, and Ocado also expects to sign similar deals with other retailers.
Jean-Charles Naouri, chief executive of Groupe Casino, said: “This agreement is a major leap in terms of quality: 50,000 food items will be offered in the first stage to customers in the Greater Paris area with precise and speedy delivery at home and through a platform which makes it achievable to do this profitably.”
Ocado started out life delivering food from upmarket grocer Waitrose but has since struck a deal with Morrisons.
In its most recent trading update, the group posted a 13.1% rise in retail revenues to £312.7 million for its third quarter to August 27.
Including earnings from its tie-up with Morrisons, group revenues lifted by 14.3% to £344.5 million.
It is also increasing the capacity at its new centre in Andover, while also working on its fourth and biggest centre in Erith, Dartford, which is set to open next year.
Ocado boss Tim Steiner said of the French deal: “We believe that the scalable, modular end-to-end solutions provided by the Ocado Smart Platform will allow retailers such as Groupe Casino to build their online grocery offer in a way that is profitable and sustainable, creating value for customers, suppliers and shareholders.
“We continue to make investments to commercialise our proprietary platform and expect this deal to be one of many successful collaborations with leading retailers to use it the world over.”