Ocado lets Marks & Spencer off hook in £190m payout dispute
Ocado has quietly let Marks & Spencer off the hook in a long-running £190m dispute over its home delivery joint venture.
FTSE-250 Ocado has dropped its pursuit of the payout from M&S, which it believed it was owed as part of the business they ran together, City PM understands.
The two companies took a 50-50 stake in Ocado Retail when it was set up and M&S paid Ocado £560m upfront for providing its delivery services.
A further £190.7m was due to be paid depending on undisclosed targets, but M&S did not make the payment following the venture’s underwhelming performance.
Ocado had previously threatened to sue M&S over the payment, warning it would use “all available means” to obtain the cash and claiming it had a “strong negotiating position” to achieve a settlement.
“We are very confident we are owed a substantial sum of money,” chief executive Tim Steiner told shareholders in 2024.
But the firm is now understood to have dropped its pursuit of the £190m windfall, instead pointing towards its plans to “realise the potential” of Ocado Retail.
A spokesperson for Ocado said: “Ocado Retail continues to be the UK’s fastest-growing grocer, and we were pleased to announce in last week’s half-year results that the business is now profitable across all key measures.
“We expect to build further on this momentum in the coming months by expanding order capacity for customers while maintaining strong growth. Together with our joint venture partners at M&S, we remain focused on realising the significant potential of the Ocado Retail business.”
Ocado founder to step down
M&S has poured cold water over the prospect of expanding this partnership. The retailer is pushing for technical improvements and better contract terms with Ocado, according to The Times, which first reported that Ocado had dropped its pursuit of the payment.
A spokesperson for M&S told the newspaper: “We have a good relationship with Ocado. As you would expect, we are in regular discussion, working together to realise the full potential of our partnership. These discussions are positive.”
Ocado Retail has begun to tick up after its slow start, delivering a £12m pre-tax profit in the six months to April on rising customer numbers and growing average spend.
But the FTSE 250 firm’s troubles now lie elsewhere, as it struggles to attract new partners in its warehouse tech business following the closure of some of its North American ventures.
Steiner, who co-founded the firm in 2000, announced earlier this month that he will step down as chief executive and transition into a founder role in about 18 months, following a board room tussle with chairman Adam Warby.
Shares in Ocado jumped by 2.3 per cent to 189p on Tuesday.