Ocado entering United States market through technology deal with Kroger

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Online retail specialist Ocado has signed its fourth global deal, with the announcement that it will be supplying its Ocado Smart Platform technology to Kroger in the US.

Its automated systems complete the processing and packing of online grocery orders, using hundreds of robots in its United Kingdom distribution centres.

That figure could rise to 20 during the first three years of the partnership, it added.

The new relationship is not expected to affect Kroger's earnings per diluted share guidance range for 2018 and 2019 as it is already reflected in the company's "Restock Kroger" plan.

Ocado shares were trading nearly 80% higher on Thursday afternoon - reaching £10 per share at one stage.

Even though Ocado remains the #13 most shorted stock, according to FCA disclosure rules, this is an improvement over its position in July 2016, when it was the most shorted stock with 21.37% of shares out on loan and 16% in November 2017, before the first deal came through and the company began proving the sceptics wrong.

The company claimed the value of the Kroger partnership was worth more than the others in France, Canada and Sweden combined.

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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.

"Our success as a retailer shows that we can offer customers unrivalled choice, quality and convenience, efficiently and profitably".

As part of the deal, Kroger is pay GBP183m (US$247.5m) for a 5% stake in the London-listed, online pure-play.

Ocado, which already works with Sweden's ICA, Canada's Sobeys and France's Casino (as well as Morrisons in its home market), said it had agreed a contract that could see Kroger open up to 20 automated warehouses in the United States over the next three years.

There are losers in the rapid ascent of the share price - the short sellers betting that Ocado would stumble and fall with the onslaught of the big beasts of online retail, led by Amazon.

"Bagging a giant USA retailer is a major coup for Tim Steiner and as previously noted, we should see many more deals".

Shares rocketed by almost 37 per cent in early trading, and were up by 33 per cent at the time of writing.

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