This article first appeared on GuruFocus .
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Total Group Sales:GBP17.4 billion, up over 20% year-on-year due to the consolidation of Ocado Retail.
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Sales Excluding Ocado Retail:GBP14.2 billion, 1.9% ahead of last year.
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Adjusted Profit Before Tax:GBP671.4 million, including GBP100 million from cyber insurance proceeds.
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Free Cash Flow from Operations:GBP131 million.
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Food Sales Growth:7% increase in value, 3.3% in volume.
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Food Operating Margin:4.6%, down from 5.4% last year.
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Fashion, Home & Beauty Sales Decline:7.7% decrease.
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Fashion, Home & Beauty Operating Margin:5.5%, down from 11.3% last year.
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International Sales Decline:7.2% decrease.
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Ocado Retail Sales Growth:15% increase, with M&S product sales surpassing GBP1 billion.
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Net Funds Position:GBP338 million, excluding lease liabilities.
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Group Net Debt:GBP2.4 billion, including Ocado leases.
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Store Openings:12 new food stores, with plans for 18 more in the coming year.
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Investment Plans:GBP650 million to GBP750 million in capital investment, focusing on store rotation, supply chain, and digital technology.
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Warning! GuruFocus has detected 4 Warning Signs with BOM:532699.
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Release Date: May 20, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Marks & Spencer Group PLC ( MAKSF ) ended the year with a strong balance sheet, allowing for continued investment in growth and transformation.
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The company reported a significant increase in food sales, with a 7% growth in value and 3.3% in volume, driven by new product launches and investment in value.
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Ocado Retail, a joint venture, reported a 15% increase in sales, surpassing GBP1 billion in turnover for the first time.
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The company is making strategic investments in automation and technology, including a new fully automated distribution center, to improve efficiency and support growth.
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Marks & Spencer Group PLC ( MAKSF ) maintained its position as the UK's most trusted brand according to YouGov, reflecting strong customer loyalty.
Negative Points
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The company experienced a decline in Fashion, Home & Beauty sales by 7.7%, largely due to the impacts of a cyber incident that disrupted operations.
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Operating margins in Fashion, Home & Beauty fell significantly from 11.3% to 5.5%, reflecting lower sales and higher stock management costs.
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International sales were down 7.2%, with shipment delays and declines in owned and franchise stores impacting performance.
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The cyberattack resulted in GBP131 million in costs, affecting profitability and cash flow.
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Despite growth in the second half, the overall adjusted profit before tax declined year-on-year, highlighting ongoing challenges in recovering from the cyber incident.
Q & A Highlights
Q: Can you provide insights on the availability and newness in Fashion, Home, and Beauty, especially in the fourth quarter and moving into the first quarter? A: Stuart Machin, CEO, explained that as they exited Q4, growth was driven by promotion and clearance, leading to a good stock position entering Q1. Stock levels are two weeks higher than last year, with a mix of core and new summer stock. Availability has improved, especially online, and is now running in the high 80s. However, there are still availability issues with smaller sizes in some areas. Overall, they are in a good place with strong product offerings and expect progress in Q1 and Q2.
Q: When do you expect the investments in supply chain transformation and the tech platform to translate into margin improvements for Fashion, Home, and Beauty? A: Stuart Machin, CEO, stated that the first investment is in Lichfield, which will open in about a year. This investment will enhance online supply chain capabilities, providing more stockholding points and better customer experience. Benefits in availability, service, and cost savings are expected from FY28, accelerating their online business strategy by three years.
Q: How are you currently thinking about inflation trajectory in the UK, and how do you expect customer responses to differ between food and clothing? A: Stuart Machin, CEO, noted that food inflation is at 3%, driven by supplier cost increases and regulatory burdens. The company aims to mitigate these through a cost-out program and reinvestment in price to grow volumes. They are focused on being competitive in the market despite the headwinds.
Q: Can you comment on the rumored price caps and consumer expectations amid budget pressures? A: Archie Norman, Chairman, and Stuart Machin, CEO, dismissed the price cap idea as impractical. They emphasized that the government should focus on working with businesses for growth. Consumer research shows concerns about cost of living and political uncertainty, impacting value perception. M&S remains focused on providing value and quality.
Q: What is your level of confidence in getting back to pre-incident levels of 11% margin in Fashion, Home, and Beauty? A: Stuart Machin, CEO, expressed confidence in achieving margins greater than 10%. The team is focused on both online and store improvements, with upside expected from sourcing and supply chain enhancements. They aim to maintain full price sales at 80% and are well-positioned with good product offerings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
