Ocado upbeat on Kroger relationship despite management change

By James Davey

LONDON (Reuters) -Ocado, the British online supermarket and technology group, is confident its U.S. grocery partner Kroger will opt to grow its e-commerce business despite a recent change in management, Ocado's boss said on Thursday.

Ocado struck a deal with Kroger in 2018 to help the U.S. firm ratchet up its delivery business with the construction of robotic warehouses.

The initial deal saw Kroger identify 20 sites to build automated warehouses, or customer fulfilment centres (CFCs) as Ocado calls them, in the United States, making the group Ocado's most important partner.

However, so far, only eight sites have gone live, with a further two in the cities of Charlotte and Phoenix not due to open until early in Ocado's 2025-26 financial year, which starts in December.

Last month, Kroger's interim CEO Ron Sargent, who succeeded long-time boss Rodney McMullen in March, said he was reviewing the group's e-commerce operations.

Ocado CEO Tim Steiner told Reuters he visited Sargent and Kroger's chief digital officer Yael Cosset in the U.S. earlier this week.

"We were together for many hours," Steiner said in an interview after Ocado reported first-half results.

"It's really clear from their own statements that they want to grow their e-commerce business, and we're committed to help them in any way we can to achieve that," he said, adding that the U.S. is "undoubtedly an enormous ongoing opportunity for us as a business."

However, Steiner said he could not put a timeline on when the target of 20 sites would be achieved.

He also declined to comment on whether the exclusivity element of its deal with Kroger, which is conditional on growth, would roll off later this year.

(Reporting by James Davey; Editing by Joe Bavier)