Marks & Spencer Says $763 Million Ocado Fundraising Underwritten

Deirdre Hipwell, Bloomberg News

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Marks & Spencer Group Plc said a 601 million-pound ($763 million) shareholder rights issue to finance a deal with online grocer Ocado Group Plc was fully underwritten, giving the U.K. retailer a boost as it shuts stores to adjust to rising competition.

The news came as the main street retailer reported mixed financial results, with profit falling for another year but coming in slightly ahead of expectations. Full-year sales fell slightly more than analysts predicted in the clothing and home business, but a bit less than they reckoned for the food unit.

Key Insights

The rights issue will represent about 20% of the existing issued share capital. That will help fund the company’s agreement to buy half of Ocado’s U.K. business for 750 million pounds, taking its food offerings online.
Profit keeps falling as the company has failed to keep up with the rise of e-commerce. It’s currently in the middle of yet another turnaround program, which is being led by Chairman Archie Norman and Chief Executive Officer Steve Rowe.
M&S is attempting to restore its fortunes by expanding its food range while lowering prices and improving quality, style, price and sizing of its clothing division. M&S said Wednesday that it will open larger, “higher volume” food stores with good parking, while scaling back low-volume, higher-cost Simply Food stores.
The company said performance will be weighted toward the second half of the year.

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