Morrisons said in February that the “amended agreement [with Ocado] is subject to detailed terms being agreed and wil only proceed if it enables Morrisons to achieve profitable growth online”.
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The FTSE 100-listed supermarket and the online grocery delivery service said the former will take capacity at an Ocado warehouse, which is now being build in Erith, a district of the London Borough of Bexley in south-east London.
Morrisons said under the new deal, a restriction on store picking had been lifted, a profit share agreement would be cancelled and its research and development fee to Ocado would be reduced.
“Morrison have got most of what they wanted in this agreement”, said Charles Allen, an analyst at Bloomberg Intelligence.
Morrisons first teamed up with Ocado back in 2013 to launch its online store.
Morrisons’ exclusivity restrictions on Ocado will also be reduced when the store pick solution goes live, “although it will still be prohibited from serving certain grocery retailers”.
Sky News has learnt that Wm Morrison is likely to announce within days that it has reached a deal to take capacity at an Ocado warehouse in Erith, Kent.
Under the terms of the new deal, Ocado will have fewer restrictions preventing it from working with other retailers, although the company has still agreed not to tie-up with major players Tesco, Asda, Sainsbury’s and discounters Aldi and Lidl.
The supermarket announced a separate wholesale deal to supply Amazon with fresh and frozen food in Britain earlier this year. “Our capital expenditure guidance of c.£450m for 2016/17 and a sustainable range of £400m-£450m per annum in future years is unchanged”.
As of 12:12 BST, Morrisons’ share price had added 2.19 percent to 192.11p, outperforming the benchmark FTSE 100 index which has climbed marginally higher and is now 0.32 percent better off at 6,831.16 points.
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The warehouse is set to be completed by 2018 and will be able to meet more than 200,000 online grocery orders a week.
