Ocado took a big step towards vindicating its business model on Monday after it inked a deal with one of Canada’s largest grocers, Sobeys.
The news comes less than two months after the company landed a similar tie-up with French supermarkets chain Casino. The deal is the third international one since June. Shares jumped 10.7% to 457.1p.
The agreement with Sobeys will see the online retailer burnish its credentials as a tech company after it first said in 2015 that it wants to license its Ocado Smart Platform (OSP). However, a key deal fell through at the time, casting doubt over its strategy.
Ocado will dish out £15 million to build Sobeys a swanky new warehouse in Toronto and supply its robots and software. Ocado expects profits to grow from 2019 onwards on the back of the deal. Sobeys will pay the online retailer fees on signing and an on-going sum. “We expect this to make cash for us,” said finance boss Duncan Tatton-Brown.
Ocado was one of the most shorted stocks last year.
“The debate on Ocado is moving from ‘will it sign a deal?’ to ‘how many deals can be signed?’ ” Bank of America Merrill Lynch’s Xavier Le Mane said.