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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Amazon.com, Inc.    AMZN

AMAZON.COM, INC.

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Kroger set to place warehouse order with partner Ocado

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10/30/2018 | 05:27am EDT
FILE PHOTO: The Kroger supermarket chain's headquarters is shown in Cincinnati

LONDON (Reuters) - U.S. supermarket chain Kroger Co is expected to order the first three of 20 high-tech warehouses from online grocer Ocado by the end of the year under the terms of a breakthrough deal agreed in May.

Through the deal with its largest partner, Ocado will ratchet up its delivery business by building robotically operated warehouses for Kroger in the United States, raising the stakes in the battle with Amazon.com Inc.

The Kroger deal is Ocado's biggest yet, exceeding all of the warehouses the firm has built or plans to build with Morrisons in Britain, Casino in France, Sobeys in Canada and ICA Group in Sweden.

Ocado said the detailed agreement sets out the key parameters for its working relationship with Kroger.

It includes how Kroger will order warehouses, or what Ocado calls Customer Fulfilment Centres (CFCs), and the basis on which Ocado will develop and operate those sites in the United States. Kroger is expected to order 20 CFCs over the first three years of the agreement.

Ocado shares rose as much as 6 percent on Tuesday, taking gains over the last year to 195 percent.

The UK firm did not disclose the location of the first three sites but said details will be made public by Kroger in several weeks.

The target is for Kroger's CFCs to go live within approximately two years of each order being placed.

Ocado said the terms and fee structure of the Kroger deal are similar to those for its other transactions to-date combining up-front fees and ongoing capacity fees. It did not disclose figures.

Bernstein analyst Bruno Monteyne said he is assuming that Ocado will spend 30 million pounds per CFC, with Kroger paying a capacity fee of 3.5 percent.

Ocado expects the peak cumulative net capital outflow of the initial three CFCs to be 90 million pounds - well within its financing headroom of over 500 million pounds.

As with previous deals, Ocado has agreed to install and maintain modules of Mechanical Handling Equipment (MHE) sufficient to provide an agreed level of processing.

The first CFCs ordered in 2018 will have funding requirements similar to earlier deals. However, Ocado and Kroger are still discussing how future CFCs will be funded.

Analysts said Kroger could take on a bigger part of the capital expenditure outlay in return for keeping a bigger share of the future food retail profits.

($1 = 0.7828 pounds)

(Reporting by James Davey; editing by Keith Weir)

By James Davey

Stocks mentioned in the article
ChangeLast1st jan.
AMAZON.COM, INC. -0.64% 1906.59 Delayed Quote.3.18%
CASINO GUICHARD-PERRACHON 1.23% 35.43 Real-time Quote.-15.04%
EMPIRE COMPANY LIMITED 0.72% 27.8 Delayed Quote.-8.73%
ICA GRUPPEN 3.36% 443 Delayed Quote.1.33%
KROGER 2.18% 32.29 Delayed Quote.11.38%
OCADO GROUP PLC 2.21% 1364.5 Delayed Quote.6.68%
WM MORRISON SUPERMARKETS PLC 3.74% 185.7 Delayed Quote.-7.06%
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Financials (USD)
Sales 2020 335 B
EBIT 2020 18 021 M
Net income 2020 14 059 M
Finance 2020 54 219 M
Yield 2020 -
P/E ratio 2020 68,1x
P/E ratio 2021 48,7x
EV / Sales2020 2,69x
EV / Sales2021 2,24x
Capitalization 955 B
Chart AMAZON.COM, INC.
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Amazon.com, Inc. Technical Analysis Chart | AMZN | US0231351067 | MarketScreener
Technical analysis trends AMAZON.COM, INC.
Short TermMid-TermLong Term
TrendsNeutralNeutralNeutral
Income Statement Evolution
Consensus
Sell
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Mean consensus BUY
Number of Analysts 50
Average target price 2 396,02  $
Last Close Price 1 918,83  $
Spread / Highest target 40,7%
Spread / Average Target 24,9%
Spread / Lowest Target -3,59%
EPS Revisions
Managers
NameTitle
Jeffrey P. Bezos Chairman, President & Chief Executive Officer
Brian T. Olsavsky Chief Financial Officer & Senior Vice President
Patricia Q. Stonesifer Independent Director
Thomas O. Ryder Independent Director
Jonathan Jake Rubinstein Lead Independent Director
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