Marks & Spencer Group (MKS) H1 25/26 earnings summary

Executive summary

• Interim period was significantly impacted by a major cyber incident, causing operational disruption, one-off recovery costs, and system outages, but resilience and transformation investments continued.

• Group sales rose 22.1% year-over-year to £8 billion, driven by the consolidation of Ocado Retail; Food sales up 7.8%, Fashion, Home & Beauty down 16.4%, and International down 11.6%.

• Adjusted profit before tax fell 55.4% to £184.1 million, with statutory profit before tax at £3.4 million, reflecting £101.6 million in cyber incident costs and other adjusting items.

• Interim dividend increased 20% to 1.2p per share, supported by a strong balance sheet and net funds excluding lease liabilities of £176.1 million.

• Transformation strategy, product innovation, and shareholder value creation remain central, with accelerated progress in some areas despite setbacks.

Financial highlights

• Group statutory revenue was £8 billion (+22.1% year-over-year), with adjusted operating profit at £251.4 million (-45.7% year-over-year).

• Adjusted profit before tax was £184.1 million, down £229 million year-over-year, including £100 million of insurance proceeds.

• Statutory profit before tax was £3.4 million; free cash flow from operations was an outflow of £193 million.

• Adjusting items totaled £167.8 million, with £101.6 million related to the cyber attack.

• Net funds position (excluding leases) was £176.1 million; group net debt increased to £2.53 billion due to Ocado Retail lease consolidation.

Outlook and guidance

• Full recovery and return to normal operations expected by year-end, with second half profit anticipated to be at least in line with the prior year as incident effects diminish.

• Transformation and cost reduction targets increased, with a new savings goal of £600 million by FY28.

• Medium- and long-term ambitions remain unchanged, with focus on disciplined capital allocation and sustained investment in transformation.