LONDON (Reuters) – Britain’s Marks & Spencer (M&S) warned on Wednesday it will take over three years for online supermarket Ocado Retail to fulfil its potential.
Formed in 2019, Ocado Retail is a 50/50 joint venture between M&S and Ocado Group which delivers M&S food.
“We’re very positive about the potential of Ocado (Retail) but to be quite frank … that potential is going to be realised in three plus years, not in the next 12 months or 24,” M&S CEO Stuart Machin told reporters after the clothing and food retailer reported much better-than-expected first half results.
M&S’s share of Ocado Retail’s net loss increased to 23.4 million pounds from 0.7 million pounds, driven by costs related to new and excess capacity.
“They’re running about 75% of capacity so at the moment it’s pretty high fixed costs and that’s something else on our mind and definitely on (Ocado Retail CEO) Hannah’s (Gibson’s) mind,” Machin said.
In September, Ocado Retail reported it had returned to volume growth for the first time since the COVID-19 pandemic.
(Reporting by James Davey; editing by Paul Sandle)