Ocado’s share price jumped by more than six per cent yesterday amid rumours that the firm will team up with Marks and Spencer to deliver food.
Last week, M&S chief executive Steve Rowe confirmed that a team was investigating a food delivery trial for the autumn. Subsequently, reports emerged that Ocado was in line to partner with M&S when it moves into the delivery business.
M&S has not confirmed the rumours. However, investors are clearly hoping that a deal with Ocado goes through; at one point this morning, the e-retailer’s shares were up by as much as eight per cent.
Ocado already counts Waitrose and Morrisons as supermarket partners, and also recently announced a deal with Dobbies Garden Centres.
George Salmon, equity analyst at Hargreaves Lansdown said: “Ocado’s technology is clearly outstanding, but in recent years its profits have been anything but.
“The group can point to double digit revenue growth and the fact that an ever-increasing number of us are using its service, but it’s long been clear it needs to do more to justify its current lofty valuation. The company’s future hangs on the possibility of signing lucrative deals with others for the use of its resources.”