Marks & Spencer Group (MKS) H2 2025 (Q&A) earnings summary

Executive summary

• Sales reached £13.9 billion, up 6.1% year-over-year, with profit before tax and adjusting items rising 22% to £875.5 million.

• Free cash flow from operations grew to £443 million, and net funds exceeded £400 million, marking the strongest balance sheet in nearly 30 years.

• Food sales rose 8.7% (like-for-like 8.6%), outperforming the market for over three years; fashion, home, and beauty sales grew 3.5% (like-for-like 4.4%).

• International sales declined 8.5% due to challenges in India and franchise markets, but a reset and investment in value are underway.

• Ocado Retail sales grew 15%, with M&S ranges up 20%; results will be consolidated from this year as an accounting change.

Financial highlights

• Return on invested capital (ROIC) increased to 16.4% from 10% three years ago.

• Growth CapEx delivered exceptional returns, with strong paybacks on new and renewed stores.

• Clothing and home gross margin improvement was largely driven by FX and is considered sustainable if rates hold.

• Full-price sales in clothing were about 80% last year.

Outlook and guidance

• Entered the new financial year with strong momentum; food, fashion, home, and beauty are ahead of budget.

• Cyber incident is expected to impact group operating profit by around £300 million this year before mitigation, with recovery actions and insurance expected to offset some losses.

• Online disruption to continue through June, with normal operations expected to resume in July.

• CapEx guidance increased to £600–650 million, with a run rate expected for the next few years.

• Focus remains on cash margin and volume growth rather than margin rate, with continued investment in value.