Ocado Announces Partnership With Lotte Shopping; Shares Leap 40% but Still Significantly Cheap

Ocado announced a partnership between its solutions business and Lotte Shopping, one of the largest retailers in South Korea, which operates department stores, hypermarkets, supermarkets, and e-commerce brands with more than 1,000 stores nationwide and revenue of around GBP 9.5 billion. Under the conditions of the deal, Lotte has committed to six customer fulfillment centers in order to develop a nationwide fulfillment network by 2028, with the first CFC due to go live in 2025. Lotte will also use Ocado's in-store fulfillment software capabilities starting in 2024. According to the release and subsequent conference call, the fee structure agreement is similar to those with other international partners, with the partner paying certain fees up front and during the development phase and then ongoing fees linked to sales and installed capacity within each CFC. The partnership is exclusive (similar to other international partnerships) on the basis of an agreed schedule of CFC capacity and longer-term market share targets. The agreement with Lotte is the first such partnership for Ocado since the Aeon deal in 2019.