Ocado to build robotic warehouse for unnamed European retailer

By James Davey and Yamini Kalia

LONDON, July 21 (Reuters) - Britain's Ocado said on Tuesday it would build a large robotic warehouse for a fast-growing European national retailer that it did not name, providing a boost to its embattled technology solutions business.

Last week, shares in Ocado, which provides automated technology for distribution centres and runs its own UK online grocery business through a joint venture with Marks & Spencer, tumbled to a 13-year low after first-half results disappointed investors.

They jumped over 12% on Tuesday but are down 37% over the last year.

The agreement with the unnamed retailer will see Ocado install its latest technology into a new automated warehouse, or Customer Fulfilment Centre (CFC) as it calls them. It is due to go live in full-year 2028.

Ocado said the retailer expects to quickly transfer its existing online order volumes into the CFC, with the site expected to go live with utilisation at just over half of its design capacity.

Ocado added that the transaction is not expected to have a material financial impact in its current financial year.

"Together with our agreement with Asda earlier this year, this partnership highlights the growing demand for our solutions across the breadth of our technology offering," CEO Tim Steiner said.

OCADO REPOSITIONING AFTER PARTNER SETBACKS

Ocado is trying to reposition itself after two key North American partners scaled back their tie-up.

Kroger in the U.S. and Sobeys in Canada opted to close robotic customer fulfilment centres they ran with Ocado, blaming weaker-than-expected demand.

Their retreat raised fresh questions over the viability of Ocado's business model, particularly for grocery partners whose customers are spread beyond dense urban areas.

Ocado says the expiry of exclusivity agreements in most of its overseas markets, including the U.S., allows it to seek new partners.

It has pivoted to promoting new store-based automation technology rather than its traditional standalone automated warehouses.

In May, Ocado struck a technology deal with Asda, Britain's third-largest food retailer, to overhaul its online fulfilment from stores.

(Reporting by James Davey in London and Yamini Kalia in Bengaluru; Editing by Shreya Biswas, Muvija M and Aurora Ellis)