Shares in Ocado (OCDO) jumped 13 per cent in early trading, after the FTSE 250 online grocery provider announced a deal with Asda to upgrade the supermarket鈥檚 delivery service.
Unlike its joint venture with Marks and Spencer (MKS), in which Ocado is supplied by M&S food but fronts the customer proposition as a retailer in its own right, the Asda deal is much more akin to a back-end licensing agreement.
The deal will see Asda roll out Ocado鈥檚 technology across its website and app, where it fulfils more than 700,000 orders per week, to help with picking and packing. Ocado does not expect to see any financial benefit until FY27. 鈥淥cado has the opportunity to show its robots can operate on a smaller scale and speed-up in-store fulfilment,鈥� said Charles Allen, an analyst at Bloomberg Intelligence.
It is welcome news for the group, after the loss of major licensing deals with key North American partners Kroger (US:KR) and Sobeys in December sent the shares spiralling to their lowest level since 2013.
鈥淣o new deals will be big enough to compensate for the loss of Kroger,鈥� said William Woods, an analyst at Bernstein, at the time.
The shares are more than 90 per cent down from their 2020 highs.
Find out why we鈥檙e bearish on Ocado here.
