TIDMOCDO
RNS Number : 8732E
Ocado Group PLC
01 November 2022
This Announcement contains Inside Information
1st November 2022
Ocado Group/Lotte Group
Announcement of partnership between Ocado Solutions and Lotte
Shopping
We are pleased to announce the signing of a partnership between
Ocado Solutions ("Ocado") and Lotte Shopping ("Lotte") to develop
Lotte's online business in South Korea with the Ocado Smart
Platform ("OSP").
Lotte Group is one of the largest business conglomerates in
South Korea, with interests spanning retail, food, hotels and
chemicals, with a total annual revenue of 75 trillion KRW
(GBP45bn). Lotte Shopping, the largest retail affiliate of Lotte
Group, operates department stores, hypermarkets, supermarkets and
e-commerce in South Korea, with more than 1,000 stores nationwide
and an annual revenue of 15.6 trillion KRW (GBP9.5bn).
Under this agreement, Ocado and Lotte will develop a network of
Customer Fulfilment Centres ("CFCs") across the market, underpinned
by the end-to-end capabilities of the Ocado Smart Platform. Ocado's
in-store fulfilment ("ISF") solution will also be rolled out across
Lotte's store estate.
The agreement plans for the development of a nationwide
fulfilment network, with 6 CFCs planned by 2028 ([1]) . CFCs will
cover multiple geographies and cater to a wide range of online
grocery missions. We plan to implement ISF in 2024, with the first
CFC due to go live in 2025.
This partnership will also bring new technologies announced at
Ocado Re:Imagined to Lotte's operations, and it will introduce
multi-storey CFCs for the first time. This innovation features OSP
grids installed on multiple levels, unlocking a wider range of
property types for CFCs and enabling more efficient use of space in
densely built environments.
The structure of fees agreed with Lotte are similar to those
agreed with other international Ocado Solutions partners. Lotte
will pay Ocado Solutions certain fees upfront and during the
development phase, then ongoing fees linked to both sales achieved
and installed capacity within the CFC and service criteria.
The partnership is exclusive in South Korea on the basis of
Lotte ordering an agreed schedule of CFC capacity and in the longer
term meeting mutually agreed market share targets.
Kim Sang-hyun, CEO of Lotte Shopping, said
"This partnership with Ocado, one of the most innovative
companies worldwide, will be a great opportunity for Lotte Shopping
to provide our customers with a new online grocery shopping
experience. Also I expect this will be the first step for us on the
way not only to increasing our competitiveness and presence in the
e-grocery market, but also to achieving the leading position in the
overall grocery market in Korea."
Tim Steiner, CEO of Ocado Group, said
"This partnership brings the Ocado Smart Platform, the most
advanced technology for serving online grocery, to one of the most
mature ecommerce markets in the world. I'm delighted to welcome
Lotte to the innovative group of retailers developing their online
operations with Ocado. With this new partnership, our unique,
proprietary technology will now power the online businesses of
twelve major retailers across ten countries worldwide."
Luke Jensen, CEO of Ocado Solutions, said
"South Korea is among the most developed and dynamic markets for
grocery ecommerce in the world. Lotte is a powerhouse grocery
player in the market, with deep connections to its customers and
the ambition to dominate the ecommerce channel in grocery. We can't
wait to introduce a game-changing proposition to Korean shoppers
with Lotte.
This partnership also gives Ocado another important foothold in
Asia Pacific as we target further growth across the region."
Expected financial impact for Ocado Group
Ocado Group expects this deal to create significant long term
value to the business. The impact of this transaction should be
negligible on earnings in the current financial year as no cash
fees will be recognised in revenue until operations commence. Ocado
Group expects minimal additional capex in FY23 with the majority of
additional capex in the 12 months prior to the opening of CFCs, the
first of which is expected in 2025.
Ocado Group will be hosting an analyst conference call at 7.30am
today. We encourage you to register here for access.
Alternatively the following details can be used although please
note there may be a queue to register: +44 (0) 33 0551 0200 and
confirmation code: 9680553.
A replay facility will be available shortly after the call.
Contacts
OCADO
-- Tim Steiner, Chief Executive Officer, on 01707 228 000
-- Stephen Daintith, Chief Financial Officer, on 01707 228 000
-- David Shriver, Chief Reputation Officer, on 01707 228 000
-- Martin Robinson at Tulchan Communications, on 020 7353 4200
LOTTE
-- Media: Sundae Lee, Head of PR, on +82-2-2118-5039 / sundae.lee@lotte.net
-- Investors: Jihwan Seol, Head of IR, on +82-2-2118-2023 / jhseol@lotte
Notes to Editors
About Ocado Group
Ocado Group is a UK based technology company trading on the
London Stock Exchange (Ticker OCDO). It provides end-to-end online
grocery fulfilment solutions to twelve of the world's largest
grocery retailers and holds a 50% share of Ocado Retail Ltd in the
UK in a Joint Venture with Marks & Spencer. Ocado has spent two
decades innovating for grocery online, investing in a wide
technology estate that includes robotics, AI & machine
learning, simulation, forecasting, and edge intelligence.
About Lotte Group
Lotte Group, established in 1967, is Korea's fifth-biggest
conglomerate encompassing four key business areas including Food,
Retail, Chemical and Hotels with more than 90 affiliates. Lotte
Shopping, the largest retail affiliate of Lotte Group, operates
department stores, hypermarkets, supermarkets and e-commerce in
Korea, with more than 1,000 stores nationwide and an annual revenue
of 15.6 trillion KRW (GBP9.5bn) and is in charge of overall grocery
business of Lotte Group. Lotte Shopping continues to develop new
store formats and various services to provide customers with the
best shopping experience online and offline.
The person responsible for arranging the release of this
announcement is:
Neill Abrams
Group General Counsel and Company Secretary
Ocado Group plc
Buildings One & Two Trident Place
Mosquito Way
Hatfield
Hertfordshire
AL10 9UL
Tel: +44 (0)1707 228 000
Email: company.secretary@ocado.com
([1]) Equivalent to 30 modules of capacity
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END
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