CANBERA (dpa-AFX) - Ocado Group plc (OCDO.L) announced Tuesday the signing of an agreement with Australian retailer Coles Group Ltd. The company will partner with Ocado Solutions to develop Coles Online's grocery business in Australia using the Ocado Smart Platform or OSP.
Ocado said the adoption of OSP will enable Coles Online to serve customers in Australia's larger urban areas by fulfilling orders through Ocado's unique robotic Customer Fulfilment Centres or CFCs. Customers in less populated areas will benefit from Ocado's proprietary store-pick software.
Ocado expects this deal to create significant long term value to the business. The impact of this transaction should be earnings negative in the current financial year as no cash fees will be recognised in revenue until operations commence.
Ocado expects minimal additional capex in FY19 with the majority of additional capex in the 18 months prior to the opening of the CFCs.
Coles operates 818 supermarkets, 911 liquor stores, and 712 Coles Express petrol stations across the country and generates sales in FY2018 of A$39.4 billion or about 22 billion pounds.
Coles and Ocado have agreed to operate two CFCs, one in Sydney and one in Melbourne. These facilities are expected to go live within four years. Coles Online will also transition its store-pick based operations to the Ocado Smart Platform and this is expected to take place in parallel with the CFCs going live.
The agreement is exclusive in Australia as long as certain conditions continue to be maintained.
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