Shares in online supermarket rise to six-month high on news former executive chairman of M&S will replace Lord Grade
Sir Stuart Rose, the former executive chairman of Marks & Spencer, was on Tuesday named as new chairman of the online groceries business Ocado, sending shares in the firm to a six-month high.
Rose will take up his role on 13 March, just before his 64th birthday, replacing Lord Grade who is retiring later this year after nearly seven years at the helm.
The company takes on Rose as it faces a make-or-break year, opening a second distribution centre, in Warwickshire, to compete against mainstream supermarket rivals.
Rose said: “I’ve been very impressed at the impact and progress Ocado has made. As retail goes through a fundamental shift into the digital world, I believe that Ocado’s model and the high standards of customer service that it provides will see it emerge as a powerful online player. I’m looking forward to being part of the team.”
Ocado’s chief executive, Tim Steiner, said: “Sir Stuart is joining Ocado as we enter a hugely exciting period, with a near doubling of our capacity. We are looking forward to benefiting from his extensive retail experience and counsel.”
The City welcomed Rose’s return to the stock market with Ocado shares up nearly 6% to 100p – a six-month high.
The online grocer has won few fans in the City since its overhyped flotation. The shares are still trading well below the price investors paid and Rose will have bridges to rebuild. Some analysts were cautious over his decision to join a business many believe will never generate profits.
Clive Black, an analyst at Shore Capital, said: “Sir Stuart is nothing but a man who enjoys a challenge and he is someone we hold in high regard. He is also great fun, colourful, opinionated and experienced and he has the potential to bring much needed esteem to Ocado, a company that had a tarnished flotation to our minds and has a fundamentally flawed business model in our view.”
At M&S Rose saw off a hostile takeover attempt by Sir Philip Green and was credited with turning around the fortunes of the chain during his leadership between 2004 and 2010. But he did not cure the problems at M&S, which again is underperforming high-street rivals.
After leaving M&S he held several roles, including being adviser to the private equity firm Bridgepoint, which owns Pret-a-Manger. He Rose is chairman of the fashion retailer Blue Inc and a board member of Land Securities.
Last year he said he was still keen to return to the corporate frontline. He said: “My four criteria: I don’t want to work with people I don’t like; I don’t want to work in a business I either don’t like or don’t understand; I don’t want to work for nothing unless I choose to, and I do a fair amount of that already; and I want to have some fun.”
Rose will take over at Ocado’s annual shareholders’ meeting in May, and become chairman designate from March. He owns Ocado shares worth £750,000.
In November Ocado raised £36m in a share placing that allowed it to agree a vital refinancing with banks on £100m of debt used to pay for the new distribution facility.
The company also announced the non-executive director Wendy Becker was stepping down from the company less than a year into her tenure to focus her attention on her new role as chief operating officer of the fashion retailer Jack Wills.
His predecessor, Lord Grade, a former chairman of the BBC and ITV, is set to retire and earned £100,000 a year for his role on the board. Rose earned more than £1.1m a year as executive chairman at M&S.