Marks and Spencer Group plc

Marks & Spencer reported total group sales of GBP 17.4 billion, up 20% year over year, driven by Ocado consolidation. Excluding Ocado Retail, sales were GBP 14.2 billion, up 1.9%. Group adjusted profit before tax was GBP 671.4 million, including GBP 100 million of cyber insurance proceeds, and free cash flow from operations was an inflow of GBP 131.3 million. Food sales grew 7% and volumes grew 3.5%; Fashion, Home & Beauty sales declined 7.7%, with store sales down 2.3% and online sales down 18.4%. For the coming year, management said it expects to invest GBP 650 million to GBP 750 million of capital net of disposals, and in food it expects 2 to 3 percentage points of growth from non-like-for-like space. They also guided to food net margin of above 4% and said fashion margin remains targeted at 10% or greater over time, with improvements from Lichfield expected from FY '28.

Stuart Machin framed the year as a recovery and reset: the business absorbed operational disruption, restored growth in the second half, and ended with a strong net funds position. He emphasized that M&S is moving from transformation into 'reinvesting for growth,' centered on stores, supply chain, and data/technology. His tone was confident but pragmatic, repeatedly pointing to customer value, disciplined investment, and the need to stay competitive amid tax, regulation, and inflation pressure.

Alison Dolan said the Lichfield fashion distribution center was acquired for a headline purchase price of GBP 67.5 million, with about GBP 20 million more for automation commissioned through the D&T line and a small additional OpEx amount. She described the company’s capital allocation as focused first on cash generation and then on funding growth investments and dividend growth over time. On returns, she cited a 20% IRR and about a 4-year payback hurdle for D&T investments, while noting supply chain projects have a longer payback and that the clearest near-term return is food’s non-like-for-like top-line growth. She also reiterated that food margin should remain above 4% and that Lichfield and automation should support online and store margin improvement over time.

Analysts pressed on Fashion, Home & Beauty availability, newness, and margin recovery, with management saying stock is in better shape, availability is now in the high 80s, and the business is seeing better product reviews and stronger price points. Questions also focused on Lichfield spend and returns; management clarified the headline site cost at GBP 67.5 million, with roughly GBP 20 million additional automation spend, and said the site should improve online margins from FY '28. Several questions addressed food pricing, tax and inflation pressure, and possible government price caps; management said it had not been directly approached on price caps, called the idea unrealistic, and said it is trying to absorb as much cost as possible while protecting value. Analysts also asked about dividends and the pace of capex returns; management said cash will first fund growth investment, with dividend growth over time.