In This Article:
* Kroger partnership in U.S. is Ocado's biggest yet
* Service agreement with Kroger still to be signed
* Ocado Q3 retail revenue up 11.5 pct
* Shares rise as much as 4.8 pct (Adds detail, finance chief, analyst comment, shares)
By James Davey
LONDON, Sept 18 (Reuters) - British online grocer Ocado said on Tuesday that Kroger, its most important partner, had made good progress identifying locations for the first of at least 20 sites to build automated warehouses in the United States.
In May, the U.S. supermarket group struck a deal with Ocado to ratchet up its delivery business with the construction of robotically operated warehouses, upping the ante in its battle with Amazon.
The Kroger deal is Ocado's biggest yet, exceeding all of the centres the firm has built or plans to build with Morrisons in Britain, Casino in France, Sobeys in Canada and ICA Group in Sweden.
Kroger is working to identify the first three sites for warehouses, which typically take two years to open.
"They’re making good progress identifying which particular sites and which particular cities. And we’re making good progress working on the details of the commercial relationship," Duncan Tatton-Brown, Ocado's chief financial officer told reporters, without naming the locations.
“There’s a lot of work going on because even though the final deal (service agreement) isn’t agreed we are actually being paid. So nothing is holding us up," he said.
Online grocery shopping is growing rapidly, but companies are still grappling with the challenge of how to make money from taking goods at different temperatures to customers' doors.
Ocado's experience of developing a high-tech distribution system has helped its progress towards sustainable profit growth, with its shares up more than 200 percent over the last year thanks to four major overseas technology partnership deals.
The stock rose as much as 4.8 percent on Tuesday after Ocado reported third-quarter retail revenue growth in line with full-year guidance and said it had ramped up capacity in Britain with the opening of its fourth robotic warehouse this summer at Erith, near London.
The stock was up 39.2 pence at 951.8 pence at 0925 GMT, valuing the business at 6.4 billion pounds ($8.4 billion).
"We think there is a great deal for management to now execute on and thus see a low likelihood of another major deal in the near term," said RBC Europe analyst Sherri Malek.
Ocado said Erith processed over 20,000 orders last week, 14 weeks after opening, a number its third warehouse in Andover, southern England, took 15 months to achieve.