Ocado plays down the prospect of renegotiation of contract with Morrisons

ONLINE GROCER Ocado said that Morrisons is “very pleased” with its 25-year contract to operate the supermarket’s online delivery service and it does not expect new CEO Dave Potts to try to renegotiate the controversial £216m deal.

Mr Potts, the former Tesco ex- ecutive, will start at Bradfordbased Morrisons next week amid analyst speculation he may decide the 25-year contract with Ocado is too generous.

However, Ocado’s chief financial officer Duncan Tatton-Brown played down the prospect of any re-negotiation of a contract it re- gards as watertight. “I’m sure David Potts when he joins will have quite a lot of things on his plate,” he said.

“I don’t think he needs to worry so much about his e-commerce business, I think that’s doing quite well.

“Morrisons

have been

very pleased with the operations and the scale of business that they’ve built up. I think they’re pretty happy with it.”

The CFO said Ocado chief executive Tim Steiner did plan to meet Mr Potts, though he stressed that was a requirement of the contract.

Last month new Morrisons chairman Andrew Higginson said he thought the Ocado agreement was one of the better deals signed by ousted CEO Dalton Philips.

Mr Tatton-Brown was speaking after Ocado posted a slight acceleration in quarterly sales growth.

The firm, which delivers groceries for Waitrose, said gross retail sales rose 15.2 per cent in the 12 weeks to February 22, up from 14.9 per cent in the final quarter of last year.

Average orders per week rose 18.1 per cent to 183,000, although average order size fell 2.4 per cent to £114.72.

Ocado’s deal with Morrisons helped the firm report its first annual pre-tax profit in its 15-year history.

It aims to seal its first technology deal with an overseas retailer this year.