Internet retailer Ocado saw half-year sales today but slumped back into the red after it was hit by the opening of new warehouses.
The company, which is chaired by former Marks & Spencer boss Sir Stuart Rose, said growing customer numbers boosted revenues by 15% to £382.7 million.
However, the cost of opening two warehouses in Dordon, Warwickshire and Welwyn Garden City, Hertfordshire saw the retailer record pre-tax losses of £3.8 million from maiden profits of £200,000 a year earlier.
Ocado shares jumped more than 40% following the announcement, while Morrisons was up by 1% in the FTSE 100 Index.
Ocado chief executive Tim Steiner said the agreement with Morrisons would have no impact on its existing arrangements.
The launch will see the retailer use Ocado's recently opened distribution centre in Warwickshire for deliveries through a Morrisons-liveried fleet.
The 25-year deal involves Morrisons paying up to £170 million to Ocado to acquire the site and equipment.
Supermarket Morrisons is to start its online groceries business by the end of this year after unveiling a tie-up with delivery firm Ocado.
Ocado is closely linked with Waitrose, exclusively delivering the supermarket's products - as well as its own and those of branded ranges - to its customers and the move is likely to spark a backlash.
Mark Price, managing director of Waitrose, recently told The Sunday Telegraph its lawyers would seek to examine any tie-up between the other two companies.
The former boss of Marks and Spencer, Sir Stuart Rose, is taking over as Chairman of online grocer Ocado. Rose left M&S at the start of 2011 after a six years. Ocado sales were up 14% over Christmas, to £91.6 million in the six weeks to January 6.
Sir Stuart Rose said: "I have been very impressed at the impact and progress Ocado has made to date. As retail goes through a fundamental shift into the digital world, I believe Ocado's model and the high standards of customer service it provides will see it emerge as a powerful online player."
Despite a successful Christmas, Ocado has yet to post an annual profit.