- New delivery hub will go live in 2027
- Relief rally after bad news on Canada
- Ocado shares down 53% year-to-date
Shares in Ocado (OCDO) were up nearly 6% to 346p as the online grocery retailer said it planned to build a third CFC (customer fulfilment centre) in Kuki-Miyashiro prefecture in Japan.
The new CFC will go live in 2027 and will be developed with hypermarket group AEON (8267:TYO).
SIGN OF CONFIDENCE
Ocado entered an exclusive partnership with AEON in 2019 to develop the online operations of the AEON NEXT grocery business using the OSP (Ocado Smart Platform).
The Japanese firm's first CFC in Chiba-city opened in July 2023, serving customers in the Kanto region. A second CFC based in Hachioji is scheduled to go live in 2026.
AEON will also upgrade its live operations with the latest Ocado technologies including OGRP (on-grid robotic pick).
CANADA DISAPPOINTMENT
The positive reaction to the news from Japan was in sharp contrast to several weeks ago when the online grocer was dealt a big blow in Canada.
Sobeys, one of Ocado’s key partners in North America, said it was not going ahead with plans to open a new CFC in 2025, sending shares in the UK company to a seven-year low.
Russ Mould, investment director at AJ Bell, said: ‘Online groceries-play Ocado badly needed some crumbs of comfort to throw the way of investors after last month’s damaging revelation that Canadian supermarket chain Sobeys would delay the opening of a new customer fulfilment centre and end a mutual exclusivity agreement.
‘This undermined Ocado’s argument that its real growth engine lay in selling an out-of-the-box tech and robotics-based solution for selling groceries online across the globe.
‘In this context news that Japanese retail firm Aeon will build a third Ocado-powered robotic warehouse in the Kanto region is positive. One swallow doesn’t make a summer though and Ocado still has plenty of convincing to do with a highly sceptical market.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine.
The author of this article (Sabuhi Gard) owns shares in Ocado and AJ Bell and the editor (Ian Conway) owns shares in AJ Bell.
