Ocado Group Signs Services Agreement with Kroger
October 30 2018 - 3:10AM
Dow Jones News
By Maryam Cockar
Ocado Group PLC (OCDO.LN) said Tuesday that it has agreed
service and operational terms with U.S. retailer Kroger Co. (KR)
for a partnership between the two companies.
Under the agreement, which was first announced in May, Kroger
will order 20 customer-fulfillment centers over the first three
years of the deal, and the first three centers by the end of 2018.
The deal will consist of up-front fees and ongoing capacity
fees.
Ocado said it will install and maintain mechanical handling
equipment for Kroger's customer-fulfillment centers, which are
expected to go live within about two years of each order being
placed.
Ocado said in order to expedite the opening of the centers in
the U.S., the first centers ordered this year will have funding
requirements similar to earlier deals.
Ocado expects the earnings impact of the deal to be neutral in
fiscal 2018. Until the final funding structure has been finalized,
Ocado will finance Kroger's centers on a similar basis to previous
deals, the company said.
The expected peak net outflow for Ocado for the three centers is
90 million pounds ($115.4 million) and Ocado said with over GBP500
million of financing headroom, it is more than able to cover
this.
Write to Maryam Cockar at maryam.cockar@dowjones.com
(END) Dow Jones Newswires
October 30, 2018 03:55 ET (07:55 GMT)
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