Ocado share price rallies as group signs services deal with Kroger

US supermarket chain to order first three of 20 warehouses from FTSE 100 group

Ocado share price rallies as group signs services deal with Kroger

Shares in Ocado (LON:OCDO have jumped in London this morning as the online grocer inked a deal with Kroger which will see the US supermarket order 20 warehouses over three years. The agreement follows an announcement by the companies made earlier this year.

As of 10:15 GMT, Ocado’s share price had added 3.70 percent to 832.60p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.15 percent higher at 7,036.67 points. The group’s shares have added more than 192 percent to their value over the past year, as compared with a near six-percent rise in the Footsie.

Ocado and Kroger sign deal

Ocado announced in a statement today that it had signed a master services agreement with Kroger, which includes how the US group will order customer fulfilment centres (CFCs) and the basis on which the blue-chip group will now develop and operate those sites.

Under the terms of the agreement, Kroger is expected to order 20 CFCs over the first three years of the agreement, and order the first three CFCs by the end of the current year. The companies noted that the terms and fee structure are similar to those for other transactions to-date combining up-front fees and ongoing capacity fees.

Today’s update comes after it emerged last week that Ocado was hunting for two new distribution centres in an effort to capitalise on the surge in demand for online deliveries.

Analysts on FTSE 100 group

The 15 analysts offering 12-month price targets for Ocado for the Financial Times have a median target of 1,020.00p on the shares, with a high estimate of 1,700.00p and a low estimate of 460.00p. As of October 26, the consensus forecast amongst 19 polled investment analysts covering the online grocer has it that the company will outperform the market.  

As of 10:38 GMT, Tuesday, 30 October, Ocado Group PLC share price is 830.00p.

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