M&S chairman Archie Norman has told shareholders that he is “unhappy” with its joint venture with Ocado Retail, after recently posting a £501 million loss.
In its latest results, the online-only retailer’s sales fell 3.8% to £2.2 billion, amid a “challenging market” thanks to the ongoing cost-of-living crisis with customers opting to buy more in-store and purchasing fewer items.
As a result of its latest performance, the grocer is set to receive a 40% less performance payment from M&S, The Times has reported.
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M&S is now expected to pay £70 million less this year as part of its final instalment, worth £191 million of its £750 million venture deal in 2019. However, according to Norman, the company “strongly believes in the future of Ocado”, claiming that it is the “right model for M&S online“.
As a result, a “reset” is currently underway, which includes improving customer experience, the introduction of cost-cutting measures and improving product availability.
The partnership also hopes to maximise the potential of its expanded customer base by diversifying its offering, the board outlined at its AGM.
This comes as recently, M&S CEO Stuart revealed that over 700 M&S products had been added to Ocado’s website, claiming that “the range is getting better”.
Earlier this year, M&S reported a 4.8% rise in online sales to £1.2 billion, with growth in click-and-collect sales, active app users and Sparks loyalty membership.
In the 52 weeks that ended 1 April 2023, the omnichannel retailer saw total revenues grow by 9.6% to £11.9 billion, compared with the same period last year.
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M&S is ranked as a Leading Retailer in the 2023 RetailX UK Top500 report, whilst Ocado is named as a Top350 retailer.