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Ocado still all-in on M&S joint venture, says boss

Published 29/07/2024, 13:42
© Reuters.  Ocado still all-in on M&S joint venture, says boss
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Proactive Investors - Ocado Group PLC (LON:OCDO) boss Tim Steiner has confirmed plans to retain the company's stake in its online joint venture with Marks and Spencer (LON:MKS).

It comes as the Ocado Retail partnership approaches its five-year anniversary, a milestone that would allow either party to sell their shares to the other under certain conditions.

“I don’t want to sell the other half right now, so whether [M&S] want it or not is not massively relevant,” said Steiner in an interview with the Financial Times.

In 2019, M&S acquired a 50% stake in Ocado Retail, the business behind Ocado.com, for £750 million, aiming to expand its online food sales.

Analysts and investors are closely monitoring the partnership, particularly after M&S expressed dissatisfaction with Ocado Retail's performance.

Despite this, Steiner remains optimistic about the joint venture's future.

“It’s all symmetrical in terms of rights and obligations on each side, but right now we’re super happy owning half of it,” Steiner added.

“It’s performing well at the moment, it’s really coming back . . . We’re really excited about its future and expect it to increase profitability over time.”

In recent times, Ocado Group has been focusing on selling the software and automated warehouses that power the online business to other major grocers globally.

Recently, the company raised its profit forecasts for its technology division, despite setbacks such as the closure of three sites by US supermarket chain Kroger (NYSE:KR).

Ocado.com has been the fastest-growing among its rivals for five consecutive months, with sales up 10.7% over the 12 weeks to July 7, according to Kantar.

“At some point in the future, when we’ve got multiple cases of [others] using our technology, it may be less important for it to be owned by the same entity. Speaking as a shareholder, I would still like to own a piece of it,” Steiner added.

Read more on Proactive Investors UK

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