Marks & Spencer Group (MKS) H2 25/26 (Q&A) earnings summary

Executive summary

• Achieved strong recovery with sales and profit growth in the second half, ending the year with a robust net funds position and record 34 million customers served.

• Adjusted profit before tax fell 23.8% to £671.4m, with statutory profit before tax down 28.8% to £364.6m, reflecting a significant one-off cyber incident impact in H1; H2 saw a 4.1% profit recovery.

• Transformation accelerated despite operational disruption, with disciplined investment in stores, supply chain, digital, and technology.

• Food sales rose 7.0% to £9.7bn, with adjusted operating profit of £444.5m and margin of 4.6%.

• Ocado Retail delivered £1bn in M&S sales, up 17.7%, and returned to operating profit.

Financial highlights

• Total group sales reached £17.4bn, up 20% year-over-year due to Ocado Retail consolidation; excluding Ocado, sales were £14.2bn, up 1.9%.

• Adjusted profit before tax was £671.4m, including a £100m cyber insurance receipt.

• Free cash flow from operations was £131.3m; net funds excluding leases stood at £338.2m.

• Full year dividend increased by 16.7% to 4.2p.

• Adjusting items totaled £292.1m, including £131.3m of cyber incident-related costs, partially offset by £100m insurance proceeds.

Outlook and guidance

• Plans to invest £650m–£750m in capital (net of disposals) in the coming year, focusing on stores, supply chain, and digital.

• Expects profit growth to resume at a mid-single-digit level versus two years ago, despite macroeconomic uncertainty.

• Food to drive volume growth through reinvestment in value, quality, innovation, and new store openings.

• Fashion, Home & Beauty to focus on growth via stronger style credentials and new supply chain capabilities.

• Sector faces higher fuel, freight, and input costs, plus regulatory headwinds, mitigated by cost savings and value reinvestment.