Stuart Rose to Ocado - 'like Harry Rednapp joining QPR'
Former M&S boss has high hopes, but sceptical analyst reiterates 'sell' recommendation
SIR STUART ROSE, who stepped down as the boss of Marks & Spencer in 2011, will take over as chairman of Ocado, the struggling online grocer, in May. The Times says Rose has been a major shareholder in Ocado for over a year with 750,000 shares.
Ocado has never yet made a profit and only survives because of a £100 million 18-month loan. However, the company enjoyed a 14.2 per cent rise in sales in the six weeks up to 6 January and plans to open a second distribution centre in Dordon, Warwickshire. This will double Ocado's capacity, allowing it to deliver 300,000 grocery orders a week to homes.
Clive Black, an analyst at Shore Capital, was surprised and pleased to hear of Rose's appointment. However, Black reiterated his 'sell' recommendation for Ocado's shares, saying: "The evidence tends to suggest that bad companies will always beat good management. To use a footballing analogy, this appointment has the feel of Harry Redknapp joining QPR from Tottenham Hotspur. Where would one rather be?"
Rose, taking on his first big appointment (at £100,000 a year) since leaving M&S, said: "As retail goes through a fundamental shift into the digital world, I believe Ocado's model and the high standards of customer service it provides will see it emerge as a powerful online player."
One of Ocado's non-executive directors will be missing when Rose arrives. Wendy Becker has stepped down after being appointed chief operating officer at Jack Wills, the fashion retail chain.
Ocado's share price rose by 5.75 pence to 100.75 pence yesterday. The price has risen 50 per cent in the last quarter – but is still way below the 180p-per-share at which the company was floated back in February 2010.