Ocado shares rise on reports of delivery tie-up with Marks & Spencer

Ocado shares have surged 8% amid speculation the online grocer could be in line for a lucrative home delivery deal with Marks & Spencer.

The two retailers are reportedly set to launch talks in the coming weeks, helping push Marks & Spencer into online grocery shopping and delivery for the first time.

But M&S is said to be exploring a number of options that could see it strike up a separate partnership or ditch those plans altogether, according to sources cited by The Telegraph, which first reported the story.

Ocado already has a deal in place to deliver orders for Morrisons. But changes to the contract last summer meant that Ocado is no longer exclusively tied to Morrisons, and is only barred from working with supermarkets including Tesco, Sainsbury, Asda, Aldi and Lidl.

M&S is not included in that list, leaving the door open for a potential deal.

Both Ocado and M&S declined to comment.

But the news still pushed Ocado shares as much as 8% higher, while M&S shares were down around 0.1%.

M&S chief executive Steve Rowe last week said at an internal conference the company was looking at a soft-trial for online shopping and home delivery this autumn.

Mr Rowe said: "We continue to review food online carefully. It has not cost us anything over the last five years by not being online with food. Our customers haven't moved yet, but they will and we need to ensure that we are ready with the right response.

"There are unanswered questions over what this means for M&S and we have a team looking at this now with a view to undertaking a soft trial in the autumn.

"The economics of food online are not straight forward and it is not something that we are going to rush into until we have substantial customer insight and a better understanding of what is right for M&S and right for our customers".

Ocado is striking deals outside food retail, having confirmed on Tuesday that its general merchandise subsidiary Speciality Stores has struck a five-year agreement to service online sales for Dobbies Garden Centres.

"Dobbies will benefit from the technology, software, logistics and expertise employed by Speciality Stores, and its online orders will be fulfilled using Speciality Stores' general merchandise warehouse," Ocado and Dobbies said in the announcement.

The terms of the five-year deal have not been disclosed.

Managing director of Ocado general merchandise James Matthews said: "The expertise we have gained through operating our current Speciality Stores businesses and our Fabled joint venture with Marie Claire has allowed us to provide a compelling service proposition to Dobbies and we are excited to be working with them to help grow their online presence."