The Marks and Spencer/Ocado deal
So it turns out that there is a £750m price tag on the Marks and Spencer/Ocado deal and investors weren’t too chuffed when they found that M&S wants to raise around £600m via a rights issue and cut its dividend by 40% to pay for a 50% stake in Ocado’s UK retail division.
Marks and Spencer’s share price fell by 12.5% but Chief Executive Steve Rowe tried to emphasise the positives, saying that the venture would generate £70m in annual cost savings.
At the end of the day, I think that although the price may be high, this is the price Marks and Spencer is having to pay for being behind the curve and playing catch-up.
On the other side, Waitrose is going to have to come up with a decent Plan B for when Ocado stops selling its merchandise in September 2020.
Will it try to do something with Amazon, I wonder? It could be tricky due to the existing agreement with Morrisons and Amazon’s ownership of Whole Foods, but you never know…
The other thing I wanted to talk about today was Lego.
Now you may be aware that toy makers generally – like Mattel and Hasbro – have been having a tough time in the last few years. Traditional toys have continued to struggle against the might of tablets for childrens’ attention and toy sellers like Toys R Us have suffered as a result.
Given this backdrop, the latest update from Lego comes as welcome relief as it unveiled strong sales and profits due to the success of its Harry Potter and Star Wars lines.
Signs of a turnaround in fortune will be particularly sweet given that it has had a tough two years where it replaced its Chief Executive twice and suffered its first ever drop in growth since 2003.