Feb 5, 2019

Ocado warns distribution centre spending weighs on profits

UK online supermarket Ocado has said it expects revenue from its retail operations to grow by 10 to 15 per cent this year but warned spending on distribution centres it is building for other supermarkets would continue to affect profit. The terms of the current arrangement prevent Ocado from selling products from another big supplier. Over the past few years, Ocado has agreed technology and logistics deals with Wm Morrison in the UK, Casino in France, Sobeys in Canada and Kroger in the US. The Kroger deal, where Ocado will build 30 "Fulfilment" centres across the US, sent the group's market value sharply higher last year, propelling it into the FTSE 100 index. Ocado shares, which have more than doubled over the past year, rose 1.4 per cent in morning trade. Separately, Ocado reported on Tuesday that a fire had broken out in the newest of its four UK distribution centres.

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