Ocado Group (OCDO) received a rare boost on Friday after securing a deal to power Asda’s online grocery operations across the UK, easing pressure on the technology firm following a difficult period for its warehouse outsourcing business.
Shares in the company climbed as much as 14% during trading before settling back to close around 7% higher, with investors welcoming a partnership involving one of Britain’s biggest supermarket chains.
Under the agreement, Asda will replace and upgrade its existing ecommerce infrastructure using the Ocado Smart Platform, with both companies aiming to launch the new system in early 2027.
Asda generated more than £21 billion in sales during 2025 and operates around 1,100 stores nationwide. Its online grocery arm currently handles over 700,000 orders each week, making it one of the UK’s largest digital grocery operations.
Ocado said the partnership will see Asda deploy several of its end-to-end systems across ecommerce operations, including its customer-facing webshop technology, in-store fulfilment tools and software services.
Chief executive Tim Steiner described the agreement as an important step for both businesses as competition intensifies in the online grocery sector.
“We’re delighted that Asda has chosen Ocado to support the next phase of their online growth,” Steiner said, adding that technology, scale and continuous innovation were becoming increasingly important in the UK grocery market.
The announcement comes at a useful moment for Ocado, whose technology division has recently faced setbacks from international partners scaling back automated warehouse operations.
Earlier this year, Canadian retailer Sobeys said it would close one of its three Ocado-powered customer fulfilment centres, while US supermarket giant Kroger confirmed plans last year to shut three automated facilities in Maryland, Wisconsin and Florida.
Ocado and Kroger signed a high-profile partnership in 2018 that originally aimed to build the equivalent of 20 automated fulfilment centres using fleets of warehouse robots to process grocery orders.
Pressure on profitability has also forced Ocado into restructuring measures. In February, the company announced plans to cut 1,000 jobs, reduce research and development spending and simplify parts of its operating model as it pushed towards positive cash flow.
Despite the significance of the Asda agreement, Ocado said the transaction is not expected to materially affect financial results during its 2026 financial year, which ends in November.
The group still expects to become cash flow positive during the second half of the current financial year, with full-year positive cash flow forecast for 2027.