Ocado Chief Executive Tim Steiner is showing that growth stocks can thrive even in the most difficult of markets. Shares in the 5.4 billion pound ($6.2 billion) online grocer surged almost 40% on Tuesday after it inked a new deal with South Korea’s Lotte Shopping . Ocado plans to build six robotic warehouses for the grocer by 2028, with the first one due to go live in 2025. It looks like a great deal for the UK-based group: the hit to capital expenditures seems relatively small, partly because Lotte is covering some of the costs.
. Ocado plans to build six robotic warehouses for the grocer by 2028, with the first one due to go live in 2025. It looks like a great deal for the UK-based group: the hit to capital expenditures seems relatively small, partly because Lotte is covering some of the costs.
And the revenue boost may prove useful. The warehouses could bring in about 2.1 billion pounds of annual sales when operating at full capacity, Numis analysts reckon. Ocado’s cut would be about 5%, according to a person familiar with the matter. That implies about 100 million pounds of annual revenue, equivalent to 4% of sales in the last financial year. Most significantly, it shows that Steiner’s strategy of building warehouses for supermarkets worldwide may have legs.
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