Ocado investors set to quiz boss Tim Steiner over M&S food delivery deal

James Warrington
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Marks & Spencer Christmas Sales Expected To Be Disappointing
The proposed deal could be similar to the one between Ocado and Waitrose, which is due to expire in September next year (Source: Getty)

Ocado boss Tim Steiner will be in the spotlight this week as he delivers the firm’s annual results amid reports of a possible partnership with Marks & Spencer.

The two companies are said to be in talks over a food delivery partnership that would see the retailer use Ocado’s warehouses and delivery lorries.

Read more: Ocado and Marks & Spencer see shares rise on reports of food delivery partnership

The proposed deal could be similar to the one between Ocado and Waitrose, which is due to expire in September next year.

The move would be a significant step forward for M&S, which has been exploring options for a food delivery model and is looking to recover from a fall in sales over the Christmas period.

But questions have been raised over the exact nature of a tie-up between the two firms, with analysts pointing to the challenge of M&S basket sizes.

Unlike other supermarket chains such as Morrisons, which already has a deal in place with Ocado, M&S does not benefit from customers carrying out large weekly shops. Instead, sales come primarily from small meals to be consumed on the same day.

M&S chief executive Steve Rowe has previously acknowledged this model is not well-suited to food delivery.

Some analysts have suggested M&S could buy Ocado’s entire delivery operation, leaving the firm to focus on its technology side, which includes automated warehouses.

The talks have also raised questions about whether Ocado would hold partnerships with two premium supermarkets, or whether a contract with M&S would be brought in next year to replace the Waitrose deal.

City analysts will be looking to Steiner to give further details about the talks during Ocado’s final results on Tuesday.

Read more: A tie-up with Ocado could signal a long overdue step into food delivery for M&S

Retail analyst Nick Bubb said the proposed deal is “clearly complicated and will take time to negotiate”, but said the results offer a deadline for Ocado bosses to provide some clarity.

Investors will also be hoping for more information on Ocado’s deal with US chain Kroger, which was announced last year.