Ocado, amid a growing dispute over performance, has threatened to sue Marks & Spencer for a payment of multi-million pounds made as part of their online grocery partnership.
Ocado Retail, the joint venture between M&S and Ocado Retail that was set up by M&S in 2019 has not met the goals laid down when M&S agreed.
Ocado won’t automatically receive the £191m final payment from M&S.
Ocado’s chief executive Tim Steiner, however, said that factors like the Covid pandemic were to be considered under the terms of this deal. This means it should still receive payment. Ocado and Marks & Spencer are currently in negotiations over a settlement. However, Mr Steiner warned that legal action could be taken if the two parties fail to come to an agreement.
Mr Steiner stated: “The most important thing is that we are confident we can get the full payment. We understand that M&S might not share this view, and we are happy to have a discussion with our partners.
“We’d much prefer to solve this in an amicable and constructive manner, which is exactly what we are working toward. We’re confident we are owed an important amount of money. “I hope that we won’t get there but I will not let this money go.”
Ocado has estimated that it will receive £28m.
Steiner, however, said that this payment was “ludicrously” low and Ocado expected to receive a higher amount.
M&S’s spokesperson said that it is “committed” to Ocado Retail’s turnaround strategy and will continue to work with the company and Ocado Group in order to achieve it.
The company added: “On specific issues of the contractual contingent payment, our advice would be that the financial performance at Ocado Retail indicates the criteria for performance payment has not been met.”
After months of speculation, M&S executives had expressed their disappointment with Ocado’s performance.
M&S Chief Executive Stuart Machin stated that Ocado Retail CEO Hannah Gibson asked him in November to be more optimistic about the venture.
He said, “We must be objective. When we have just suffered a loss of £23m in a half year from Ocado, and we see an opportunity, we are positively unhappy.
Archie Norman, the chairman of M&S has told investors that he is not satisfied with its performance.
Recently, there have been signs of a turn-around. The latest figures released on Thursday revealed that the profitability in the online grocery sector has improved up to 2023.
It reported adjusted earnings of £10m in the year ending Dec 3 compared to a £4m deficit the previous year.
Ocado Group stated that this was due to a push by the company to add more M&S items to its online grocery website in order to provide shoppers with more options. Ocado now stocks 90pc M&S products, up from 80pc in November.
Ocado Retail’s better performance boosted the Ocado Group’s results. Losses were reduced to £403m from £501m in the previous year.