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Ocado share price rises as Kroger backs automated DC tech

Ocado

US supermarket giant Kroger has announced two new sites where it will use Ocado’s distribution centre platform, sparking a rise in the Ocado share price after a difficult month.

The new customer fulfilment centres, using Ocado’s smart picking and packing platform, will serve central Florida and the mid-Atlantic regions.

This follows Kroger announcing its first Ocado-powered site in Ohio in November. In total, the retailer plans to roll out 20 such sites.

Kroger CEO Rodney McMullen called Ocado “one of the most innovative advanced companies in the world” and said the centres would “redefine the grocery shopping experience” for its East Coast customers.

Investors seem to have taken the announcement as a show of faith in Ocado’s technology, following a fire at its distribution centre at Andover. Ocado’s share price was up around 5% on 20 February compared to the day before.

The company’s share price fell over 15% following the fire at the site, which had been providing around 10% of Ocado’s current capacity.

It is currently unclear what caused the fire. However, the company reported “substantial damage” to the building and contents.

Ocado said at the time that it was impossible to determine which specific equipment had been damaged but it is aiming to increase capacity at other facilities. However, it had no current information on when the site will be back online and indicated there would be a “constraint” on its ability to meet growing customer demand as it shifted orders to other sites.

Image credit: Kroger/Ocado