Ocado Revs Up With New Technology Order from Kroger

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British online grocery giant Ocado (OCDO.L) received a shot in the arm on Monday with a significant new technology order from its key U.S. partner, Kroger (KR.N). This news comes after a period of uncertainty for Ocado, following a pause in warehouse expansion by its Canadian partner Sobeys.

The order signifies Kroger’s continued commitment to Ocado’s innovative warehouse automation solutions. This technology, crucial for efficient online grocery fulfillment, will be deployed across multiple Kroger warehouses, both existing and those planned for the future. Ocado refers to these facilities as Customer Fulfilment Centres (CFCs).

The specific details of the financial value of the order were not disclosed by Ocado. However, the news was met positively by investors, sending Ocado’s stock price up 7.1% in early trading. This rise helps to recover some of the year-to-date losses, which currently stand at around 41%.

Kroger Embraces Ocado’s Latest Automation Solutions

The order encompasses two key technologies from Ocado’s portfolio:

On-Grid Robotic Pick (OGRP): This system utilizes robotic arms installed directly within the warehouse grid infrastructure. Other robots operating on the grid efficiently deposit groceries within reach of the OGRP arms, which then pick and pack them into customer bags. Ocado claims that at full capacity, OGRP can handle over 70% of a typical online grocery order selection.

Automated Frameload (AFL): This technology automates the physically demanding task of loading completed customer orders onto delivery frames for dispatch. This not only improves efficiency but also reduces the potential for workplace injuries.

Ocado highlights that both OGRP and AFL will significantly enhance efficiency and worker productivity within Kroger’s entire delivery network.

Reiterating Confidence in the Online Grocery Shift

Last week, Ocado CEO Tim Steiner sought to reassure investors about the company’s long-term prospects. He emphasized that the global trend towards online grocery shopping remains firmly in place, despite a temporary pause.

Looking ahead, Ocado faces a debt refinancing deadline at the end of 2025. However, analysts at Jefferies believe that the combined effect of the Kroger and Aeon orders, coupled with Ocado’s revised financial guidance, positions the company “in a much stronger position” for this crucial event.

In conclusion, Ocado’s latest technology order from Kroger signifies a vote of confidence in its automation solutions. This, along with continued commitment from other partners, suggests a positive outlook for Ocado’s future in the rapidly growing online grocery market.