Rose-y new future for Ocado?

Sir Stuart Rose, the former CEO of M&S has been drafted into Ocado to turn around the grocery delivery business. Can Rose work his magic?

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013

Ocado could certainly do with some wand-waving. It has failed to make a profit since inception, posting a loss of £2.2m in 2011 and £12.2m in 2010. Ocado’s share price languishes at almost half the 180p per share price it listed at in 2010.

Once the boss of the UK’s best-known high street retailer, M&S, Sir Stuart Rose will take up the chairmanship of Ocado in May.

At M&S, now arguably better known for its food than the woolly jumpers and granny pants that were its bread and butter back in the eighties, Sir Stuart was a steady hand at the tiller. Halting the decline in sales by jazzing up its clothing range – remember the ad campaign featuring sixties pin-up Twiggy and Hollywood heartthrob Antonia Banderas? – he left the brand in a much better state than he’d inherited it when he stepped down in early 2011.

Since then, Sir Stuart has had fingers in various pies: he has an advisory position at private equity house Bridgepoint, he’s a non-exec at both South African retailer Woolworths and Land Securities plc, holds a stake in online retail portfolio Hut Group, and is also chairman of the Mobile Money Network, which lets users buy goods instantly by holding their smartphone over an image.

He’s not stepping down from this smorgasbord of roles either, at least not according to a spokesman from Ocado. ‘I don’t think he’s had to give anything up to become Ocado chairman,’ she says.

The question is, how will the 63-year-old fit it all in?

On May 10, he will replace Ocado’s current chairman Lord Michael Grade, who has been with the company since 2006. Grade’s appointment raised a few eyebrows at the time – his background was in showbiz, after all. He had previously been chairman of the BBC and executive chairman at ITV.

It’s not surprising, therefore, that Ocado has now plumped for an industry veteran for the role: ‘We are looking forward to benefiting from [Rose’s] extensive retail experience and counsel,’ the company said in a statement today.

So what tricks does Sir Stuart have up his sleeve? His mission, as he puts it, is to reinvent Ocado as ‘a powerful online player’. And, despite Ocado’s lack of success to date, it’s not the complete doozy you might think. In its most recent results for the 53 weeks to 2 December 2012, sales were up 13.9% year-on-year. But retail analysts are skeptical.

‘We are delighted to see Sir Stuart back in the sector,’ says Shore Capital analyst Clive Black. ‘However, the evidence tends to suggest that bad companies will always beat good management.'

Harsh but fair? We'll have to wait and see.

Read our latest interview with Sir Stuart Rose here

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