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Ocado ( OCDGF ) signed deal with Kroger ( KR ) for 20 sites in 2018

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Eight sites currently live, further two to open 2025-26

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Ocado ( OCDGF ) CEO expects "significant number" eventually

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Kroger's ( KR ) exclusive deal dependent on growth

By James Davey

LONDON, Feb 27 (Reuters) - Ocado ( OCDGF ), the British

online supermarket and technology group, is confident its U.S.

grocery partner Kroger ( KR ) will eventually open "a

significant number" of automated warehouses despite a slowdown

in the roll-out of sites, Ocado's ( OCDGF ) boss said.

Ocado ( OCDGF ) struck a deal with Kroger ( KR ) in 2018 to help the U.S firm

ratchet-up its delivery business with the construction of

robotic warehouses.

The initial deal saw Kroger ( KR ) identify 20 sites to build

automated warehouses, or customer fulfilment centres (CFCs) as

Ocado ( OCDGF ) calls them, in the United States, making the group Ocado's ( OCDGF )

most important partner.

However, so far only eight sites have gone live, with a

further two now not due to open in Charlotte and Phoenix until

early in Ocado's ( OCDGF ) 2025-26 financial year as additional freezer

technology is added to the sites.

"I expect in the long term we will see a significant number

of warehouses and modules live in the U.S.," Ocado ( OCDGF ) CEO Tim

Steiner told reporters on Thursday after the group reported

annual results that sent its shares sharply lower.

"I still believe that the U.S. is an enormous opportunity

for the group and at some point in the future we'll look back

and go 'wasn't it challenging for a few years' and we'll see

enormous growth," he said.

Steiner said the U.S. consumer was increasingly attracted to

online grocery delivery and noted that in markets where Kroger ( KR )

had opened sites it had seen strong sales growth despite limited

marketing.

The CEO also noted that the exclusivity element of its deal

with Kroger ( KR ) is conditional on growth.

"If we found ourselves not able to do that, we obviously

would be able to operate with other partners."

Steiner also said that to reduce costs Ocado ( OCDGF ) would cut some

jobs, mainly in research and development areas. He said the job

losses would be a "low single-digit percentage" of a global

workforce of about 20,000.