The FTSE 250 company announced today that it was "delighted" to be working with one of the leading retailers of Canada.
French supermarket Groupe Casino signed a deal with Ocado a year ago to use its grocery e-commerce platform to develop its online business.
The tie-up will involve Ocado helping launch Sobeys' online grocer service, and include investment by Ocado installing its grid and robots.
According to reports, Ocado will help Sobeys will build a warehouse outside Toronto and will enable the retailer to use its e-commerce, product-picking and logistics technology to take and deliver online orders. Sobeys will gain exclusive rights to the system in Canada and will pay an undisclosed fee upfront, the Hatfield, England-based company said in a statement Monday. It extended Ocado's rally since the Casino deal by around 60 per cent...
In November, it revealed a long-awaited global deal with French firm Groupe Casino, and Ocado said at the time it was eyeing more worldwide deals.
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Ocado said it expects the deal to be earnings neutral in the financial year ending in November and sees additional capital expenditure of 15 million pounds (US$20.8 million), with more spending expected in future years. The service will utilize Ocado's last-mile routing management technology, along with "customer service excellence and punctuality".
Sobeys is Canada's second largest food retailer, operating more than 1,500 stores across the country, and generating sales of CAD23.8 billion in its most recently ended financial year 2017.
Sobeys chief executive Michael Medline was quoted as saying: "This unique and innovative Sobeys and Ocado experience will offer consumers the biggest selection, freshest products and most reliable delivery available anywhere on the planet".
The deal will come as a boost to Ocado, as speculation grows that competition could intensify in Europe after the acquisition of Whole Foods by Amazon.