Shares of Ocado rose sharply following the announcement of a new contract to build a robot-operated warehouse for an unnamed European retailer, providing a positive signal amid a challenging period for the grocery technology company. The agreement, revealed by Ocado on Thursday, involves the development of a customer fulfilment centre expected to be operational by 2028.

Ocado, known for its automated warehouse technology, declined to identify its new retail partner beyond describing it as a “fast-growing European national retailer.” The company indicated there would be no significant financial impact from the deal in the current fiscal year.

The share price closed up 9.8 percent at 194.5 pence, reflecting investor optimism. Despite the gain, Ocado’s stock has fallen by nearly 40 percent over the last 12 months, a decline attributed in part to the loss of substantial business in North America and recent corporate governance challenges.

Tim Steiner, co-founder and chief executive of Ocado, said he was pleased that their automation technology had been selected to enhance a major online grocery operation. He highlighted that this new partnership, together with a recent agreement with UK retailer Asda, underscored increasing market demand for Ocado’s solutions across its technology portfolio.

In addition to its technology contracts, Ocado operates a retail joint venture with British supermarket chain Marks & Spencer. Recent industry data showed a modest increase in Ocado’s share of the UK grocery market, rising 0.2 percentage points to 2.2 percent over the 12 weeks ending July 12. The period also saw a notable increase in grocery sales.

The new deal marks a significant development for Ocado as it seeks to stabilize and grow its business in Europe following setbacks abroad and internal boardroom changes. The construction and commissioning of the robotic fulfilment centre is expected to be a multi-year project, contributing to the company’s long-term growth ambitions in automated grocery logistics.