Marks & Spencer Group (MKS) H1 26/27 (Q&A) earnings summary

Executive summary

• H1 sales rose 16.2% to £9,255.0m; adjusted profit before tax increased 119% to £403.2m, recovering from prior-year disruption.

• Food delivered strong volume growth and market-share gains; Fashion, Home & Beauty recovered year on year but remained below prior-year levels.

• Reinvestment continued across stores, supply chain and technology, supported by net funds of £374.7m excluding lease liabilities.

Financial highlights

• Adjusted operating profit rose to £486.5m from £251.4m; statutory profit before tax was £355.1m versus £3.4m.

• Adjusted basic EPS increased to 14.8p from 6.6p; adjusted return on capital employed was 15.3%, up 2.9 percentage points year on year.

• Adjusting items were a £51.7m net charge versus £167.8m; cyber-incident costs fell to £0.3m from £101.3m.

• Free cash flow from operations was £102.2m versus an outflow of £193.0m; cash and short-term investments were £1,072.1m.

Outlook and guidance

• Full-year adjusted profit before tax is expected to be in line with current market expectations; Food margins are expected to exceed FY24/25.

• Fashion, Home & Beauty performance and profitability are expected to improve in H2 as availability recovers and transformation progresses.

• Structural cost savings of over £120m are expected in 2026/27, weighted to H2; cost growth, including marketing, was weighted to H1.

• Medium-term ambition is mid-to-high single-digit revenue growth, with faster growth in profit and EPS; FY is a 53-week year.