Ocado Abandons £191 Million Payment Claim Against Marks & Spencer

Ocado has withdrawn its pursuit of a £191 million payment from Marks & Spencer, ending a protracted dispute over their online grocery joint venture. The two retailers have resolved the matter without compensation, with both companies now concentrating on expanding their increasingly profitable partnership and renegotiating operational terms.

The Background to the Dispute

Marks & Spencer acquired a 50 percent stake in Ocado Retail in 2019 as part of an arrangement worth up to £750 million. The retailer paid £562 million upfront to enable its food range to be sold through Ocado.com, with a further £190.7 million contingent on the joint venture achieving undisclosed financial targets in the year to November 2023.

When those targets were not met, Marks & Spencer valued the outstanding liability at zero and declined to make the additional payment. Ocado responded by arguing that pandemic-related adjustments should apply, citing disruptions to customer numbers, warehouse capacity, and overall financial performance during that period.

From Legal Threats to Settlement

Ocado's chief executive previously maintained a combative stance, declaring that the company was owed a "substantial sum" and would deploy "all available means" to recover the funds. However, the technology group has now stepped back from legal action, with both parties reaching a resolution that involved no monetary exchange.

The settlement coincides with separate, ongoing negotiations between the two companies regarding the future expansion of their grocery operation. Marks & Spencer has reportedly withheld approval for additional customer fulfilment centres pending agreement on revised commercial and technical terms, seeking improved operational efficiency, system upgrades, and more favourable pricing for warehouse capacity.

A Profitable Turn for Ocado Retail

Despite the payment dispute, Ocado Retail has demonstrated a turnaround in performance. In the first half of its financial year, revenue rose 15 percent and order volumes increased 13 percent. Adjusted earnings before interest, tax, depreciation and amortisation more than doubled from £33 million to £73 million, while adjusted pre-tax earnings reached £12 million compared with a £17 million loss in the prior period.

The joint venture is now profitable across its key operational measures, marking a significant shift from its earlier underperformance. Both Ocado and Marks & Spencer have signalled their intent to expand order capacity while sustaining current growth momentum. An Marks & Spencer spokesperson confirmed the retailers maintain a good working relationship and are engaged in "regular, positive discussions" about unlocking the partnership's full potential.