Ocado is still in “constructive conversations” with Marks & Spencer in a row over a final payment that is due in around a month’s time.
Ocado has written down to zero the value of the final payment due from M&S for their £750m 50-50 joint venture, Ocado Retail, which was launched in 2019.
On a press call this morning (27 February), Ocado boss Tim Steiner told journalists that “this is purely a reflection of conservative accounting treatments, and not a reflection of ongoing conversations with our colleagues and partners at M&S on the resolution of the final payment. We continue to engage very constructively with M&S.”
The write down follows the venture’s failure to meet 2023 performance targets, leading to negotiations between the companies. Ocado had previously indicated in February last year that it could take legal action against M&S over the payment.
In its full-year accounts, Ocado cited “the current facts and circumstances, and the inherent uncertainty around any of the potential outcomes” for the write-down. However, it stated that “management is committed to maximising the amount due, and believes we have a strong negotiating position in achieving some form of satisfactory settlement.”
Ocado’s full-year results showed it had delivered narrowing losses and “significantly” improved revenues and cash flows.
In the 52 weeks to December 1, total group revenue grew by 14.1% to £3.2bn. Its robotic warehouse logistics arm grew revenues by 7.6% to £718m, with underlying earnings up by £1m to £31.1m.
The retail joint venture with M&S saw underlying earnings more than quadruple to £44.6m from £10.4m in 2023, while also achieving a 12.5% rise in weekly orders and a 12.1% increase in customers.
No comments yet