* Michael Grade to retire as chairman on May 10
* Former Marks & Spencer boss Stuart Rose to take over
* Rose says believes in Ocado model
* Analysts see crucial year ahead as Ocado expands
* Shares rise as much as 8 pct
(Adds detail, analyst comment, shares)
By James Davey
LONDON, Jan 22 Online grocer Ocado has
won the endorsement of Stuart Rose, one of Britain's best-known
retail bosses, who will become its chairman for what some
analysts see as a make-or-break expansion by the loss-making
Rose, 63, is a former head of venerable British retailer
Marks & Spencer (M&S), who was credited with defending that
group from a takeover bid in 2004 by tycoon Philip Green, but
who also courted controversy by becoming both chairman and chief
executive, in contravention of corporate best practice.
He was also criticised by some analysts for lagging rivals
like Next in adapting M&S to the internet age.
Ocado, which largely sells the products of upmarket grocer
Waitrose, has also polarised opinion.
Fans point to rapid growth in online grocery sales, its
state-of-the-art distribution centre and high customer service
Sceptics, however, note it has not made a profit since it
was founded by three Goldman Sachs bankers in 2000, and doubt
its model of filling orders from central depots will ever be as
profitable as online operations at grocers like Tesco
and J Sainsbury, which mostly pick orders in stores.
"Bad companies will always beat good management," said Shore
Capital analyst Clive Black, a long-standing critic of Ocado and
fan of Rose.
At 1045 GMT, Ocado's shares were up 6 percent at 100.8
pence, valuing the firm at 583 million pounds ($923 million).
But the stock is well below its 2010 flotation price of 180
pence and the firm is due to open a second distribution centre
in the coming months, at a time when its sales growth is lagging
that of some of its larger competitors.
"The next six months are crucial," said Panmure Gordon
analyst Philip Dorgan.
Rose, who has worked in the retail sector for 41 years,
will become an independent non-executive director and chairman
designate on March 11 before succeeding broadcasting executive
Michael Grade, chairman for six years, after Ocado's annual
shareholder meeting on May 10.
"As retail goes through a fundamental shift in 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," said Rose, who holds 750,000 Ocado shares.
Numis analyst Andrew Wade said the endorsement of Ocado's
business model by a man of Rose's retail stature was reassuring
Others, however, questioned Rose's track record in online
shopping during his time at M&S from 2004 to 2011.
"There will be some at M&S who think he should have done
more to modernise M&S's antiquated online operating systems in
his time there," said independent retail analyst Nick Bubb.
Though M&S is investing heavily in its online business, its
new web platform is not scheduled to launch until spring 2014.
Ocado is regularly touted as a bid target for M&S, as well
as grocer Wm Morrison, as neither company has a
significant online grocery business.
Panmure's Dorgan said Rose's appointment was likely to stoke
such rumours, though he was sceptical of any bids emerging.
"Ocado is gobbling up cash and is underperforming its
multichannel competitors. We don't see this changing," he said.
($1 = 0.6316 British pounds)
(Editing by Kate Holton and Mark Potter)