M&S Exits the Cyber Year With Record Food Share and a £700M 'Reinvest for Growth' Reboot
After a disrupted year, Marks & Spencer posts record food share and pivots from recovery to a capex-heavy phase — Lichfield is the bet to fix fashion's online margin.
MKS.L · Earnings Call · 2026-05-20
From 'Lost Year' to a Pointed Comeback
A year ago, Marks & Spencer was still restoring the systems knocked out by its cyber incident; the whole first half was consumed by operational disruption. So the opening of today's full-year results had a distinctly different register — closer to a victory lap than a mea culpa:The headline numbers confirm the recovery: total group sales hit £17.4 billion, up 20% with the consolidation of Ocado Retail; excluding Ocado, sales were £14.2 billion, +1.9%. Adjusted profit before tax of £671.4 million included a £100 million cyber-insurance recovery, and the balance sheet came through the crisis intact — a net funds position Stuart Machin says let the company "accelerate our transformation without compromising our financial health." M&S served a record 34 million customers and, per YouGov, is the U.K.'s most trusted brand. A year ago management admitted the availability fight wasn't won — “we're about 5% off at the moment where we want to be” — Stuart Machin, Chief Executive Officer · 2025-11-05 — while today the same metric is in the “high 80s” — Stuart Machin, Chief Executive Officer · 2026-05-20, and better than last year.This was a year of 2 halves. The first half, as you know, was dominated by operational disruption. As always, our focus during that time was our customers... we returned to sales and profit growth.
Food Leads, Fashion Waits on Lichfield
Food is unambiguously the star. Sales rose 7% on 3.5% volume growth; market share hit a record 4.1% (4.6% including Ocado), with 800,000 net new customers — the biggest gain of any supermarket this year — and 1,500 product launches. Machin's formula is characteristically blunt: “as the team in food always say, if in doubt, add quality in” — Stuart Machin, Chief Executive Officer · 2026-05-20. The minimal ingredients "Only Ingredients" range was an instant hit, and the Food business, with margin guided to hold above 4% and 2-3 points of space-driven growth expected, is firmly on its doubling path. International dipped 7.2% but struck wholesale deals with Coles (Australia Food) and Nordstrom (U.S. Fashion), while Zalando drove 200% growth in European new customers; M&S-on-Ocado sales crossed £1 billion for the first time, up 17%. Fashion, Home and Beauty is the bruise: sales down 7.7% for the year (online -18.4%) before a Q4 return to growth. The big strategic bet is a £67.5 million acquisition of a 437,000 square foot automated DC at Lichfield — “it will give us more stockholding points online, about 20% more, 80% more picking capacity” — Stuart Machin, Chief Executive Officer · 2026-05-20 — aimed squarely at fixing online margin and pick cost, with benefits expected from FY'28 as online penetration climbs toward the 50% target from a pre-incident 34%.The Triple Whammy and a Disciplined CapEx Pivot
Management was candid about the external drag. “Retailers have been hit with a triple whammy of headwinds, higher tax, including national insurance and new packaging taxes, more regulations such as Employment Rights Act and the new HFSS rules and cost pressures from the ongoing conflict in the Middle East.” — Stuart Machin, Chief Executive Officer · 2026-05-20 The incremental tax bill alone is £150 million — including a £40 million packaging tax — met with a £120 million cost-out program. Notably, while U.S. retail peers like Home Depot and Lowe's spent their calls on tariff refunds, M&S's cost pressure is U.K.-specific: taxes and regulation, not tariffs. The headline narrative is the pivot from recovery to reinvesting for growth: £650-750 million of capex across stores, supply chain, and D&T, with every project held to a 20% IRR / ~4-year hurdle. The new Sparks loyalty program — flagged a year ago as a “relaunch in March or April” — Stuart Machin, Chief Executive Officer · 2025-11-05 instead of a "big bang" — is now in Phase 1. As Alison Dolan promised a year ago on the incident aftermath,That clean-year promise is now the investment thesis: M&S is betting that disciplined capital — not just cost-cutting — writes the next chapter. With food compounding and fashion's margin repair gated on Lichfield, the market gets a rare thing: a mature retailer with a credible, funded growth plan.our expectation is that we are fully back to normal by the fourth quarter of this year, so that FY '27 is a clean, unimpacted year.