Kroger is one of the world's biggest grocery retailers, and a market leader in the U.S., with sales in fiscal 2017 of $122bn.
The deal with Kroger doesn't come as a surprise, but is "materially larger" than Bernstein had expected, with the potential for up to 20 customer fulfillment centers compared with just the one that Bernstein had envisaged as a starting point.
Ocado should be commended for its "significant potential deal" with Kroger, but Shore questions the materiality of the worldwide deals and when they will make a fundamental difference to both revenues and earnings.
One of Mayfair's most revered short sellers today took a multi-million pound hit from Ocado's rocketing shares.
"Ocado's unique, proprietary and industry-leading technology is set to transform the shopping experience of consumers around the world", he commented.
Ocado has signed a string of similar technology deals with major supermarkets in France, Canada and Sweden. Kroger buying a stake in Ocado may be seen as a move that could potentially open up long-term M&A optionality.
"Our success as a retailer shows that we can offer customers unrivalled choice, quality and convenience, efficiently and profitably".
Ocado, which already works with Sweden's ICA, Canada's Sobeys and France's Casino (as well as Morrisons in its home market), said it had agreed a contract that could see Kroger open up to 20 automated warehouses in the United States over the next three years.
Ocado said it will begin setting up Kroger with various systems to help it manage warehouse operations, automation, logistics and delivery route planning in the US.
"Bagging a giant U.S. retailer is a major coup for Tim Steiner and as previously noted, we should see many more deals. The market reaction was exceptionally bullish with shares jumping by 40% in early trade on the announcement".