M&S doubles down on refusal of final payment for Ocado Retail

By James Davey

LONDON (Reuters) - Marks & Spencer reiterated its position on Wednesday that it does not have to make a final payment to Ocado Group for its share of the Ocado Retail online supermarket joint venture.

In 2019, M&S agreed to pay up to 750 million pounds ($955 million) for its half of the jv, which took M&S food online.

A final payment, contingent on the jv's performance in its 2022/23 year, is due in August, but the two sides have been wrangling for months over whether it should be paid or not.

In February, Ocado Group conceded that the jv's actual performance in 2022/23 was below the target required for automatic payment of the final 191 million pounds.

However, it said it had identified "significant decisions and actions" taken by Ocado Retail's management that meant the target should be adjusted and the payment made.

It raised the prospect of "formal legal proceedings" if no agreement is reached.

But on Wednesday, M&S CEO Stuart Machin refused to budge on its position.

"On the contingent payment the performance target is binary and it was dependent on ORL (Ocado Retail Limited) meeting a specified level of earnings in the financial year and actually those earnings and that performance was not met," he told reporters after M&S published annual results.

"So for us it's pretty clear, we continue to write the accounting value (of the payment) as zero."

He said talks were continuing and the "slight disagreement" was not impacting the day-to-day running of the business.

"We're working very well with Ocado Retail," he added.

($1 = 0.7855 pounds)

(Reporting by James Davey; Editing by Kate Holton)