Ocado narrows losses and remains in talks with M&S as payment deadline looms

Online grocer Ocado has reported narrowed annual losses and said it remains in “constructive talks” with its retail partner Marks & Spencer in a row over a final payment due in April.

The group, which runs robotic warehouses for other chains alongside its Ocado Retail business as a joint venture with M&S, posted statutory group pre-tax losses of £374.5 million for 2024 against losses of £393.6 million a year earlier.

It said group-wide revenues rose 14.1% to £3.2 billion, with its retail chain seeing growth of 13.9%.

The firm said it remains “engaged in constructive discussions” with Ocado Retail partner M&S over the final payment of £190.7 million due in April this year under their agreement.

It stressed it would “continue to look to use all contractual or legal means available to us in order to maximise” the amount payable.

M&S is due to pay Ocado the final instalment as part of the payment for the £750 million 50-50 tie-up between the businesses, Ocado Retail, which was launched in 2019.

But the joint venture has failed to meet performance targets in 2023, leading to negotiations between the pair, with Ocado saying in February last year that it could take legal action against M&S over the payment.

Ocado revealed it has written down the value to zero in its full year accounts, “having considered the current facts and circumstances, and the inherent uncertainty around any of the potential outcomes”.

It said: “Notwithstanding this valuation, management is committed to maximising the amount due, and believes we have a strong negotiating position in achieving some form of satisfactory settlement.”

Full-year results for Ocado showed its robotic warehouse logistics arm grew revenues by 7.6% to £718 million, with underlying earnings up £1 million to £31.1. million.

The retail joint venture with M&S saw underlying earnings more than quadruple to £44.6 million from £10.4 million in 2023 thanks to the surge in sales, while it also notched up a 12.5% rise in weekly orders and 12.1% rise in customers to 1.1 million.

It added it expects retail sales by volume to rise “well ahead” of the market as it continues to add customers, forecasting revenues to rise by more than 10% in 2025.

Ocado chief executive Tim Steiner said: “In 2024, we delivered a shift in the potential of robotics and automation to improve retail supply chains.

“Our latest technologies have begun to roll out at scale to Ocado’s global partners.”

He added: “Ocado Retail in the UK continues to lead the way as consistently the fastest growing grocer in the market and reaching one million active shoppers for the first time.”