Royal Mail appoints former Ocado boss as chief executive

LaToya Harding
·3-min read
A Royal Mail postal van is parked outside homes in Maybury near Woking in southern England March 25, 2014. Britain's newly-privatised postal operator Royal Mail said on Tuesday it would cut around 1,300 operational and head office jobs in order to deliver annualised savings of 50 million pounds ($82.45 million). REUTERS/Luke MacGregor  (BRITAIN - Tags: BUSINESS POLITICS EMPLOYMENT)
Royal Mail has named Simon Thompson as its next chief executive who will oversee the postal services’ transformation from a letter-centred organisation to a focus on parcels. Photo: REUTERS/Luke MacGregor

Royal Mail (RMG.L) has named Simon Thompson as its next chief executive, who will oversee the postal services’ transformation from a letter-centred organisation to a focus on parcels.

Thompson, a former Ocado (OCDO.L) executive who also ran the NHS Test and Trace app, replaces Rico Back who left the postal service unexpectedly last year after less than two years at the helm.

For the past eight months the company has been run by interim chief executive Stuart Simpson.

Incoming boss Thompson was already a non-executive director on the Royal Mail board since 2017, and was previously chief product officer at online grocer Ocado. He also worked at Apple (AAPL), Honda (HMC), and Morrisons (MRW.L).

Keith Williams, who has been acting as interim executive chair of the group since May 2020, said: “Royal Mail in the UK is in a period of significant transition and needs to move quickly, put the customer at the heart of everything we do, and adapt our business to better serve changing customer needs.”

Royal Mail, which was privatised in 2013, has struggled in recent years amid rising costs, declining letter deliveries and a shift in demand for more parcel deliveries from online shopping, which has been boosted by the coronavirus pandemic.

In November, the FTSE 250 (^FTMC) firm recorded a £20m ($26.85m) group operating loss in the first half of 2020, but revealed that parcel deliveries outstripped letter revenue for the first time in the company’s history.

Parcel revenue now represents 60% of total revenue, compared with 47% in the prior period.

The operating loss for the period compares with earnings of £61m at the same point last year. It also follows an underlying operating loss of £129m at its core Royal Mail postal arm. Group pre-tax profits fell by 90.2% to £17m during the same period.

In September Royal Mail delivered 1.1 billion fewer letters in the five months to the end of August compared with the same period last year. It posted a 31% increase in UK parcel volumes between April and September, as home deliveries were accelerated by the pandemic.

READ MORE: Royal Mail posts operating loss amid pandemic but pins hope on parcel delivery

Royal Mail reached a landmark deal with the Communication Workers Union (CWU) last month to end a two-year dispute on job security, pay and hours for its workers. Executives said the agreement allows the company to introduce change more quickly, such as a round-the-clock operation for parcels and new technology.

Last year the group also revealed that it plans to start picking up parcels from people’s homes as it aims to capitalise on the online shopping boom.

It aims to charge 72p per parcel collection while pre-paid return packages will be charged at 60p per item. It will collect up to five parcels per address.

The new Parcel Collect service, which will rival the likes of DHL, Hermes and DPD, has so far been trialled in the west of England and will be available every every except Sunday. Customers will have to pay for the service online or by using the Royal Mail app.

Royal Mail said it was "one of the biggest changes to the daily delivery since the launch of the post box in 1852."

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