LONDON -- The shares of Ocado surged 5 pence, or 5%, to 100 pence during early London trade this morning after the supermarket delivery service said Sir Stuart Rose is to join the company's board.
Ocado, which last week said its gross sales in the run-up to Christmas had improved 14%, confirmed Sir Stuart would take the role of non-executive chairman during May. Sir Stuart will replace Lord Grade, who will retire as a non-executive director and as chairman on the same day.
Sir Stuart said:
I have been very impressed at the impact and progress Ocado has made to date. 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. I am looking forward to being part of the team.
Sir Stuart was chief executive of Marks & Spencer between 2004 and 2010, during which time he appeared to revive the venerable retailer. Within three years, he had lifted operating profits from £824 million to more than £1 billion -- Marks' highest profit since the late 1990s.
However, the credit crunch and banking crash did take their toll on Sir Stuart's record, with Marks' profits falling during 2009 and 2010 and the dividend suffering a cut in both years.
Sir Stuart's earlier career involved overseeing the sale of Argos to Great Universal stores, the merger of Booker with Iceland, and the sale of Arcadia to tycoon Philip Green. His stint at Marks also saw him fend off a bid from Philip Green, the highlight of which was a heated argument between the two men in a central London street.
Whether Sir Stuart can help guide Ocado to success, though, remains to be seen. Recent updates from the online delivery group indicated net debt of £93 million, plans for near-term capital expenditure of £46 million, a shareholder cash injection of £36 million... and half-year profits of just £1 million.
For perspective, Ocado's current market value is £615 million.
Still, Sir Stuart appears reasonably keen on Ocado's prospects. Today's statement revealed he owns 750,000 shares in the FTSE 250 company.
Of course, whether Sir Stuart's appointment, that market cap and the growth prospects for home grocery deliveries in general now combine to make Ocado a buy remains your decision.
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