Ocado boss Tim Steiner has admitted that the progress of its M&S joint venture has been “disappointing” but insisted that the retailer is “set to get back to its historic levels of profitability”.
Steiner said that the tie-up with M&S was not where he wanted it to be when the deal was struck, but said it was making “good progress” in its reset plan.
“I think overall 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,” he said.
It comes as M&S chair Archie Norman told shareholders that he was “not happy” with Ocado Retail’s performance at its AGM earlier this month.
The online giant revealed this morning that Ocado Retail made a £2.5m EBIDTA loss in its half year to May 28.
However, Steiner insisted that M&S and Ocado were fully aligned on the steps it is taking to improve performance.
“I think we’re all in agreement. I think everyone’s very pleased with the progress that’s been made and everyone’s very clear on the strategic direction,” he said.
“I think Archie comment is more around, ‘is this what we expected in 2019?’ And obviously from that perspective, it’s disappointing.
“Are we making the right moves at the moment to improve the offer, to get back to basics, to improve the execution, to drive customer acquisition to therefore drive growth, to get and to get back to cash flow neutrality and cash flow generation, and deliver on what we all hope for business would be? We are on track to do that.”
“It’s just not where we wanted to be if we looked back four years ago.”
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Steiner said that it was still in discussions with M&S over what its final payment to Ocado for the joint venture would be. The payment is contingent on Ocado Retail’s performance in the year to November 2023.
The online boss said new Ocado Retail CEO Hannah Gibson, who was appointed in September last year, was making “good progress”.
The retailer has focused on improving its value credentials and pushed the button on price cuts across more than 100 everyday food essentials last month.
Steiner flagged that “we are definitely over the worst” of inflationary price rises.
The retail boss also highlighted how the cost-of-living crisis was having some positive impact on Ocado as it had gained custom from those that were opting to save money by dining in rather than have meals out in restaurants.