Ocado has said it may need to sue M&S over a multi-million-pound payment for their online grocery partnership, as tensions rise over its performance.
M&S is withholding the payment from the online grocery specialist after its delivery tie-up failed to reach key performance targets, it was revealed last week.
Ocado Group chief executive Tim Steiner said: “We are very confident we are owed a substantial sum of money, and ultimately I hope we’ll never get there but we will not walk away from that sum of money.”
The group said that either “formal litigation” or an out-of-court settlement may be needed to get M&S to make the disputed payment.
The retailers’ £750m joint business Ocado Retail has not met targets set out when the pair partnered back in 2019, according to Ocado. As a result, the company will not automatically receive its final £191m payment from M&S.
Despite this, Ocado insisted the deal “expressly provides” the targets are adjusted if the group takes different decisions than those agreed when the partnership was signed.
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Ocado has calculated that £28m would be a “fair value” of the consideration, based on the principles of IFRS 9 accounting rules although CEO Tim Steiner described the figure as an “extremely pessimistic outlook” and a “ludicrously low number”.
Ocado Group CEO Tim Steiner said: “We believe we have a very solid case to get full payment, we know that M&S may not entirely share that view. We’re happily having a conversation with our partners, we would much rather solve this in a nice and constructive way which is what we’re working towards doing.”
The news comes as Ocado’s full-year losses narrowed to £394m and it returned to profit on an EBITDA level.
The figures, which include a £187m settlement reached with robotic warehouse AutoStore, represent a £107m improvement on last year.
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