Ocado could make early start to M&S deliveries

FILE PHOTO: Part of the Ocado CFC (Customer Fulfilment Centre) is seen in Andover

LONDON (Reuters) - British online supermarket Ocado <OCDO.L> could start home deliveries of the full Marks & Spencer <MKS.L> range before next September, ahead of their joint venture's original deadline, it said on Tuesday.

Ocado and M&S completed the 1.5 billion pound joint venture deal in August, creating Ocado Retail and signalling the end of Ocado's supply contract with upmarket supermarket chain Waitrose in September 2020.

"There is a chance we might bring forward, at least partially bring forward, that transition date," Ocado finance chief Duncan Tatton-Brown told reporters.

But he said that would require the agreement of all three parties.

"It may well be in the interests of Waitrose, some of Waitrose's suppliers and ourselves and M&S for that transition to be slightly more spread out," he said.

M&S declined to comment while Waitrose, part of the employee-owned John Lewis Partnership [JLPLC.UL], had no immediate comment.

Ocado also reported an acceleration in retail sales growth in its third quarter, helped by additional capacity from its fourth automated warehouse.

For the 13 weeks to Sept. 1, Ocado retail revenue rose 11.4% to 386.3 million pounds, compared with first half growth of 9.7% and guidance of 10-15% growth for the second half.

Average orders per week rose 12.1% to 314,000 as more slots became available, though average order size fell 0.8% to 105.42 pounds, reflecting a slightly higher frequency of purchases.

In February Ocado warned that sales growth would be dented until it increased capacity elsewhere after a fire devastated its flagship robotic warehouse in Andover, southern England.

That extra capacity was secured through a deal with Morrisons <MRW.L>, Britain's fourth-biggest supermarket group, in May to allow Ocado to take back sole use of its fourth robotic warehouse in Erith, southeast London.

"This first set of results from the joint venture between Ocado Group and M&S show the resilience of Ocado following the Andover fire and the momentum the business now has," said Ocado Retail CEO Melanie Smith.

Shares in Ocado were up 1.2% by 0845 GMT, taking year-on-year gains to 50%.

While Ocado's retail business holds only a 1.4% share of Britain's grocery market, its warehouse technology has powered the group's 9.5 billion pound stock market valuation.

Ocado has technology deals with eight major retailers, including U.S. group Kroger <KR.N> and France's Casino <CASP.PA>.


(Reporting by James Davey; Editing by Paul Sandle and David Goodman)