Ocado shares jump on hopes of Marks & Spencer home delivery partnership

 Steve Rowe, the CEO of M&S, said that the retailer was examining the possibility of launching an online food delivery trial service this autumn. 

Zlata Rodionova@zlata07
Tuesday 02 May 2017 11:50
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Any partnership would be a welcome relief for Ocado, which has not yet  found an overseas partner for a licensing deal
Any partnership would be a welcome relief for Ocado, which has not yet found an overseas partner for a licensing deal

Shares in online retailer Ocado jumped by more than 8 per cent on reports it might strike a deal with department store and food retailer Marks & Spencer which is considering becoming the latest company to offer home delivery across the UK.

Ocado shares leapt by close to 9 per cent in early trading in London, their highest level since the beginning of the year, ending the day 5.78 per cent higher, with traders attributing the jump to reports of a delivery partnership with M&S.

Last week, Steve Rowe, the chief of executive of M&S, said that the retailer was examining the possibility of launching an online food delivery trial service this autumn.

He added, however, that this “is not something that we are going to rush into until we have substantial customer insight and a better understanding of what is right for M&S and right for our customers”.

Following the news, the Telegraph reported that M&S is considering partnering with Ocado to handle the fulfilment of such orders. Any partnership would be a welcome relief for Ocado, which has not yet found an overseas partner for a licensing deal.

Both Ocado and M&S declined to comment on the report.

Last year, Ocado signed a deal with Morrisons, under which it provides technology and distribution services to the supermarket to support its online food business. However, changes to the contract last year meant that the online retailer is no longer exclusively tied to Morrisons and is allowed to run online services for other retailers.

However, Ocado is still contractually restricted from working with supermarkets including Sainsbury's, Tesco, Lidl, Asda and Aldi.

The company in January announced better than expected profit growth of 21.8 per cent to £14.5m in the year to the end of November, with growth in average orders per week approaching 18 per cent to 230,000.

Since March the online retailer is also testing delivery by electric vehicles as part of a bid to cut its carbon footprint, reduce congestion and keep noise levels to a minimum, especially in residential areas.

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