M&S has put its final payment instalment to Ocado Group on hold after the online supermarket tie-up missed key performance targets.
The joint venture – Ocado Retail – was first formed between the two companies in 2019 and as part of the deal, M&S is due to pay Ocado its last payment of £190.7m by August.
However, this is dependent on the grocer’s performance against an undisclosed target in the year to November 2023.
According to The Times, it is understood that M&S is still working out the final instalment with Ocado due to this target having “not been met”.
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As the full payment is binary, the upmarket retailer is required to either pay the total in full or not at all, however a mechanism in the contract could allow for “adjustments” if both parties agree.
Ocado Retail is expected to see “marginally positive” pre-tax profit for the 2022/23 year and “mid-single-digit” sales growth.
Back in July, M&S chief executive Stuart Machin told shareholders that he was “frustrated” by Ocado Retail for failing to feature M&S in adverts or emails, despite the supermarket owning 50% of the online venture.
In November, he added that the potential of the tie-up is unlikely to be realised for a further three years.
“We’re very positive about the potential of Ocado but to be quite frank, I think that the potential is going to be realised in three plus years, not in the next 12 months or 24.”
His comment came as Ocado Retail suffered losses of £23.4m in the first half of last year, up from the £700,000 the year before.
