Ocado has threatened to take legal action over multi-million pound payments related to Marks & Spencer’s online joint venture.
M&S, which owns 50% of Ocado Retail, is withholding part of the final £190m payment after the delivery partnership failed to meet certain performance targets.
Ocado chief executive Tim Steiner told reporters on Thursday that he believed M&S owed the company a “substantial sum” and that if a settlement was not agreed, the online grocery store The specialist retailer said it believed it could take legal action against M&S to further recover the final payment. I had a debt.
His comments came after Ocado posted a pre-tax loss of £394m for the 12 months to 3 December 2023, compared with a loss of £500m in the same period last year.
When M&S signed a deal to acquire half of the Ocado Retail joint venture in 2019 as part of its foray into the online delivery sector, it paid an initial £562m, with a final payment of £190m, as part of the partnership. achieved certain performance goals.
Ocado missed the target for the automatic payment to be made in 2023, with accounting rules estimating the payment would be just £28m.
However, Ocado said in its accounts that the arrangement provided for targets to be adjusted if management had to take a different decision or action than they had envisaged at the time the deal was signed. It said the final payment criteria needed to be revised to take into account “significant decisions and actions” taken during the coronavirus pandemic.
It added that this £28m was “significantly lower than the amount Ocado expects to receive in the future (through formal proceedings or settlement)”.
On Thursday, Mr Steiner told reporters that the current proposed payout was “ridiculously low” and that Ocado had a strong case for full payment.
He said: “We would rather resolve this issue in an appropriate and constructive manner, and we are working to do so. We strongly believe that we are deeply in debt and that ultimately I hope it never gets to that point, but I’m not going to walk away from that amount.”
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An M&S spokesperson said: “M&S remains fully committed to Ocado Retail’s turnaround strategy and is committed to working with the company and the Ocado Group to deliver it.
“Regarding the specific issue of contractual performance fees, our advice is that Ocado Retail’s financial performance means that performance payment criteria are not met.”
Ocado Group on Thursday revealed its pre-tax loss for the year has fallen after securing a £187m settlement with Norwegian rival Autostore following a High Court case.
Group revenue increased by 9.9% over the year to £2.8bn, driven primarily by the company’s Technology Solutions business, which grew by 44% over the year to £420.5m.
