Ocado recruits Rose as new chairman to replace Lord Grade
The former chairman of Marks & Spencer has thrust himself back in the City spotlight by riding to the rescue of online grocer Ocado.
In his first major role since leaving M&S, Sir Stuart Rose will replace Lord Grade — best-known for his leadership of ITV, BBC and Channel 4 — as chairman. Grade will step down after seven years at the loss-making business after its annual meeting in May.
The hiring of Rose, who was also the chief executive of M&S, sent the take-over rumour mill into overdrive today, although analysts played down the prospects of his former employer, or food wholesaler Booker or grocer Morrisons, launching a bid for Ocado in the short term.
A key role for Ocado’s new chairman will be to repair its battered relationship with the City. Ocado floated at 180p in July 2010 but saw its shares bomb to 58.5p in November.
The Hatfield-based company burns up cash, has not made a pre-tax profit in all its 11 years, and two months ago was forced to tap investors for £36 million to give it more head room on its banking facilities.
Philip Dorgan, analyst at Panmure Gordon, described the appointment as a “good move which should improve upon the company’s previous Pravda-like external communications”.
Rose’s appointment, who left M&S in early 2011, was received well today and shares in Ocado jumped by 6.9p, or 7.2 per cent, to 101.9p.
Rose, who is also chairman of fashion chain Blue Inc, said: “As retail goes through a fundamental shift into the digital world, I believe Ocado’s model and the high standards of customer service it provides will see it emerge as a powerful online player.” Online grocery spending is set to almost double from £5.6 billion in 2012 to £11.1 billion by 2017, according to trade body IGD.
Ocado posted sales up by 14.2 per cent over the six weeks to January 6, but this was behind Tesco’s Christmas growth of 18 per cent and Sainsbury’s 15 per cent in its third quarter.
Clive Black, analyst at Shore Capital, said: “We believe Ocado’s progress to date has been pretty disastrous for shareholders”, and added: “To use a footballing analogy, this appointment has the feel of Harry Redknapp joining QPR from Tottenham Hotspurs; where would one rather be?”
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