Ocado sells its pioneering tech to French chain
OCADO shares shot up more than 20pc yesterday after it finally signed a major international deal.
The British online supermarket will replicate its own warehouse in andover – where stock is managed and customer orders are prepared using robots – for French supermarket group Groupe casino.
Groupe casino’s warehouse is expected to be larger than Ocado’s Hampshire site, with the building and the launch estimated to take two years.
The agreement will see the French supermarket use Ocado’s online technology, Ocado Solutions, to cater for customers in the greater Paris area, and the Normandie and Hauts de France regions.
The tie-up is a major result for Ocado which has long promised a tech deal with an overseas company. However, until this week, investors had been disappointed.
In the first stage of the roll out, Groupe casino will deliver 50,000 food items to customers in the Paris area.
Ocado expects the agreement to add significant value to the business and hopes to win similar deals as a result.
Yesterday, shares in the FTSE 250listed grocer closed up 21pc, or 53.4p, at 309.6p.
The jump in shares – which have been trading flat over recent months in anticipation of an announcement – is a long-awaited gift for shareholders.
George Salmon, equity analyst at Hargreaves Lansdown, said that the agreement should push investor sentiment more in Ocado’s favour. ‘There’s never been much doubt about Ocado’s technology, but to what extent the group can monetise its wondrous whirring machines has long been debated,’ he said.
‘While we’ll need to see more deals come through, this development has kick-started Ocado’s transformation from niche British retailer into an international provider of game-changing technology.’
Ocado said the deal will have minimal impact on its earnings in the year to the end of december 3, with profitability expected to grow as it rakes in fees from the agreement and signs similar deals.
Groupe casino will pay upfront and ongoing fees as part of the deal with Ocado.
The online grocer’s chief executive Tim Steiner said: ‘We are delighted that Groupe casino has decided to partner with Ocado Solutions to grow and develop its online food business.’
Ocado also has ties with Morrisons but has been under pressure to secure an international deal for some time now.
In June it revealed that it had won a contract with a major European retailer but did not provide a name.
Ocado’s most recent results showed that its profit increased by 1.7pc in 2016 to £12m, while its revenue increased 15pc to £1.3bn compared to a year earlier. THE maker of the Queen’s Christmas crackers has posted strong results following a boom in its US business and other overseas markets.
IG Design, which owns Tom Smith, the upmarket supplier of festive wrapping paper and Christmas crackers, posted a 15pc increase in profits to £35.4m in the six months to the end of September. Sales jumped 14pc to £166.5m, driven by its US business which enjoyed an 18pc rise to $91.3m.
The firm makes and distributes stationery, gift wrapping and cards for retailers worldwide. Customers include Poundland, Harrods, Selfridges and Tesco. Compared to its overseas operations, IG Design’s UK business saw the least growth but still posted a 4pc rise in sales to £57.5m.
The company also expects to benefit from sales linked to the Royal Wedding of Prince Harry and Meghan Markle next spring. Paul Fineman, chief executive, said: ‘It provides a bit of a feel-good factor.’