Ocado’s tie-up with French supermarket

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.

FTSE 250-listed Ocado announced the deal in early June, although at the time it said the customer wanted to remain 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 and profitable by 2019. 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.”

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 £312.7m for its third quarter to August 27.

Including earnings from its tie-up with Morrisons, group revenues lifted by 14.3% to £344.5m.

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.”

Ocado’s shares rose 20.84% or 53.40p to close at 309.60p.

Ocado is expecting the deal with Groupe Casino to be profitable by 2019.