M&S’s chairman, Archie Norman, has told shareholders that he was “not happy” with the performance of the joint venture and conceded that there was “work to do”.
Making it clear that the feeling was mutual, Ocado’s chief executive, Tim Steiner, declared that the venture was “not where we want to be” at this stage.
Steiner said: “If we look back at where we were in 2019, and what we hoped the business would be trading at right now, obviously that’s disappointing.”
In 2019, it seemed as though a phoenix had risen from the ashes of the collapsed deal between Ocado and Waitrose.
M&S claims to have added 700 more of its products to Ocado in the past few months.
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Ocado partnered with M&S in a deal reportedly worth as much as £750million, and touted to deliver a “profitable, scalable presence in the online grocery market”.
M&S’s then-chief executive Steve Rowe described it as his “biggest and boldest moment so far,” but it appears that all is not well in the greengrocers' relationship.
Underlying tension has clung to the deal since 2019, for the companies are still allegedly at loggerheads over the size of the final payments to be made under the initial tie-up deal.
Uneasy foundations have been cracked further by Ocado posting below-par financial results, despite the pandemic-induced boom in demand for home deliveries.
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Ocado posted an underlying loss of £2.5million in the six months to the end of May,
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Ocado posted an underlying loss of £2.5million in the six months to the end of May, adding to the £4million loss incurred last year.
With revenue up just 5 per cent on last year and prices being increased more than 8 per cent on average, overall losses widened 37pc to a record £290m for the first half of its financial year.
In an effort to buoy sales, M&S have publicly pushed for closer collaboration, adding more its products and launching new products online.
Clive Black, an analyst at Shore Capital, said it followed a period where Ocado management seemed to “lose focus” on M&S products.
Complaints have been raised that M&S were linking recipes to the Ocado website where the ingredients were not actually available
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He told the Telegraph: “There was much greater profile and awareness of the Waitrose brand on Ocado and I think there’s probably an understandable frustration at M&S as to why its food and its products haven’t been more notably pushed.”
Speculation over Ocado’s future has been rife, centering on reports of a takeover approach from Amazon.
Ocado executives have not commented on the rumours, though Steiner has mused: “Speculation is speculation. I have nothing to say.”
Asked whether Ocado would accept an offer to go private, Steiner added that he had a responsibility to shareholders to take all offers seriously but caveated this by saying it was not something he was “out pursuing”.
