Ocado to enter FTSE100

Online grocery technology company Ocado has made it into the FTSE 100 Index after a series of deals where it supplies its proprietary logistics systems to other retailers around the world. Its market capitalisation is now more than £6bn.

Ocado joins the index above Marks and Spencer. Despite Marks and Spencer’s sales being seven times that of Ocado at £10.5bn, its own market cap is £4.8bn, where Ocado’s sales are £1.5bn.

Due to the new direction of the grocer, its May 2017 share price of 310p has grown to 880p.

Earlier in May, Ocado announced it had done a deal with US grocery giant Kroger to develop a series of automated warehouses. The deal currently involves three sites but this could grow to 20. Kroger has bought a 5% stake in Ocado.

Ocado has worked with a number of such grocery companies around the world, including Morrisons in the UK, ICA Group in Sweden, Sobeys in Canada and Groupe Casino in France.

In the group’s annual results earlier this year, chief executive Tim Steiner emphasised the importance of these international deals. “We believe that taking advantage of these international opportunities now will make our virtuous cycle turn faster in the years ahead and we expect that to translate into higher returns on capital. We look forward to our future opportunities and challenges”.

Ocado will join the FTSE 100 on 18th June. The Index is reviewed quarterly to ensure that it continues to portray an accurate reflection of the market.