Marks & Spencer plans to double the size of its food business after closing its joint venture deal with Ocado earlier this year.
Marks & Spencer (M&S) is looking to double the size of its £6 billion food business by leveraging its new joint venture with online grocer Ocado, chairman Archie Norman told shareholders at its AGM on Tuesday.
‘Our ambition is to double the size of our food business and Ocado sets us well on the way to doing that,’ Norman said at the annual shareholder meeting.
‘We think this is transformational for our business,” he added.
M&S plans to ramp up food business post-Ocado deal
M&S acquired a 50% stake in Ocado’s UK retail business back in February, with the deal valued at £562.5 million.
The joint venture sees M&S finally acquiring a home delivery service for its UK-based food business, with it expected to go live in September next year.
M&S has not reacted as quickly as its rivals in creating its own online grocery delivery service, which has hurt its performance over the last few years, but that is all set to change over the next 12 months
In fact, M&S’ chairman said that the new joint venture will help the retailer to improve its terms from suppliers by as much as 8%, delivering up to £10 million in savings per annum.
M&S transformation on track though share price stagnates
Over the last four years, M&S has seen its share price fall by more than 55% from 514p on July 10 2015, with the British retailer’s stock currently trading at 209p levels as of 17:20 GMT on Tuesday.
Despite its ambitious growth strategy and progress with its online delivery service, M&S share price continues to slide, with its management admitting that there is still a lot of work left to do.
‘We are really tackling at heart, the organisation and the way it works…We are making progress,’ Norman said.
‘I do believe the business in many areas is on the right track, in some areas we’re still struggling.’