M&S "Reinvesting for Growth" as Interim Sales Rise 16.2%

Marks & Spencer has published interim results for the 26 weeks ended 26 September 2026.

Stuart Machin, M&S Chief Executive, said: 

“We hit the ground running in the first half of the year, accelerating the pace of change and delivering market share growth in both businesses. Our hard work over the last few years to create a strong balance sheet has built a firm financial footing from which to invest and we are confident in the opportunities ahead. Despite the onslaught of cost headwinds, we have remained focused on our ambitions, and we are clear on our plan.

Our Food business is ahead, delivering double-digit volume growth in a flat market and we have momentum as the UK’s fastest growing grocer. One and a half million more customers are shopping with us and our continued focus on quality, innovation and value is appealing to more families, as we become more of a shopping list retailer. Investment in new stores, technology and a modern supply chain are getting us ahead for future growth, and our plan to double the size of the Food business is on track.

In Fashion, Home & Beauty we bounced back from last year, gaining share in a declining market, remaining the UK’s leading fashion retailer and number one for style, quality and value. Availability and stock flow are now improving, we are broadening our appeal and the brand is in good health, but the results fell short of their potential and show there is a lot more to do. We are resetting the backbone of the business from sourcing to supply chain, merchandise planning, stores and online. Although we have much improved product, the end-to-end transformation is in the foothills.

Our International business is growing, expanding through strategic franchise and marketplace partnerships. Ocado Retail is now profitable, supported by strong growth in M&S Food sales. There is work to do, but we see significant opportunities ahead for both.

We enter the second half in a strong position, with a solid performance in October under our belts. We are ready to deliver an unforgettable Christmas for our customers, with the best food and fashion ranges we’ve ever had. I want to thank our colleagues for the energy and commitment they bring to M&S every day, particularly as we enter our busiest time of year, and a special thank you to our customers, who have been unwavering in their support.

Four years ago, we set out a very clear strategy to protect the magic of M&S while modernising the rest and we are making good progress. As we look forward to Christmas, we are laser-focused on delivering both our trading and transformation plans."

Sales and profit return to growth in the first half, reflecting recovery from cyber incident

• M&S Group adjusted profit before tax1 £403.2m, versus £184.1m last year
• Statutory profit before tax £355.1m, versus £3.4m last year
• Food sales2 up 13.9%; adjusted operating profit of £288.6m, margin of 5.6%
• Fashion, Home & Beauty sales up 17.5%; adjusted operating profit of £150.5m, margin of 7.5%
• International sales up 22.1%; adjusted operating profit of £15.3m, margin of 4.9%
• Ocado Retail3 sales up 20.6%; adjusted operating profit of £25.6m, margin of 1.4%
• Adjusting items of £51.7m, versus £167.8m last year
• £750m capital investment programme on track across stores, supply chain and technology
• Strong balance sheet, further improvement in net funds excl. lease liabilities of £374.7m and cash and short-term investments of £1,072.1m
• Interim dividend increased by 16.7% to 1.4p

Growing Food and rebuilding market share in Fashion, Home & Beauty

• Food volume growth of 11.9% driven by consistent reinvestment in value and quality
• Fashion gained market share in a declining market, despite availability constraints
• International growth driven by expansion of franchise and new partnerships, offsetting Middle East disruption
• M&S Food sales on Ocado Retail up 22.8%, now comprising 30.9% of average basket
• Cost growth weighted to first half; over £120m of structural savings expected in full year
• 18 store investments with 13 new or extended stores, 5 renewals including Oxford Street flagship
• Lichfield and Daventry supply chain investments on track, supporting growth and efficiency
• Technology investment increased across FH&B planning tools and digital capabilities

Reinvesting for growth

The last four years were focused on reshaping M&S. With a stronger balance sheet and higher cash generation, M&S is now reinvesting for growth through a mix of product quality, value, innovation and style, new stores, relocations and renewals, lower-cost supply chain capacity, improved stock flow and modernised technology.

The first half of this year marked the start of the next phase of the strategy. M&S completed investments including 18 new, extended or renewed stores, acquired and constructed additional distribution capacity and relaunched Sparks. Investment will increase in the second half, focused on supply chain modernisation, digital capabilities to support sales growth and improve operational efficiency and to create a more productive store estate.

Against this backdrop, M&S Group adjusted profit before tax was £403.2m compared with £184.1m in the prior year, reflecting recovery from last year's incident. The result compared with £413.1m in 2024/25, reflecting the higher phasing of cost growth in the first half of the year and lower Fashion, Home & Beauty profitability.

Food delivered strong volume-led growth, market share gains versus 2024/25 and margin expansion. The business continued to attract new customers, which increased by 1.5 million over the past two years.

Fashion, Home & Beauty also gained market share, but sales and profit remained below 2024/25, despite growth in online sales. This was due to availability disruption reflecting the long-tail impact of the incident and lower store sales during the prolonged summer heat. The clothing market declined by 5.5% versus 2024/25.

International and Ocado Retail both increased profit contribution, supported by growth, operational leverage and continued execution of strategic initiatives.

The business has absorbed significant external cost headwinds versus two years ago including approximately £35m of packaging taxes arising from the Extended Producer Responsibility (EPR) scheme, increased pay and National Insurance costs and costs related to disruption in the Middle East, partially offset by our ability to mitigate costs.

M&S closed the first half with a strong, investment-grade balance sheet providing the capacity to reinvest for growth, with net funds excluding lease liabilities of £374.7m and cash and short-term investments of £1,072.1m. The interim dividend has increased by 16.7% versus last year to 1.4 pence, consistent with the policy of paying one-third of the prior full year dividend at the half year. Given continued cash generation and the Group's cash position, the Board remains confident in the ability to deliver growing dividends over time.

Outlook
M&S enters the second half focused on executing its growth strategy. Over the medium-term, M&S’s ambition is to generate mid-to-high single-digit revenue growth and higher growth in profit and earnings per share.

Food continues to outperform the market, driven by ongoing investment in value, quality and innovation.

In Fashion, Home & Beauty, market conditions remain challenging. However, performance is expected to improve in the second half compared with the first, as availability has recovered, creating a better balance between core and seasonal stock, and as the FH&B transformation gathers pace.

M&S continues to build its structural cost reduction programme across technology, logistics and stores. Cost growth including marketing was weighted towards the first half while structural cost savings are planned to build through the second half.

For the full year, Food margins are expected to be ahead of 2024/25. In Fashion, Home & Beauty, the actions underway are expected to support a progressive improvement in profitability.

M&S therefore expects Group adjusted profit before tax for the full year to be in line with current market expectations.

FOOD WINNING MORE CUSTOMERS
Our overall ambition for Food set out in 2022, is to grow market share by 1% by 2027/28 and to deliver an operating margin consistently over 4%. Given our low overall market shareh there remains significant opportunity to increase customer numbers and basket size, driving long-term growth.

Sales increased 13.9% versus last year, with like-for-like sales growth of 11.7%. Adjusted operating profit increased to £288.6m and operating margin improved to 5.6%, reflecting strong volume growth alongside the benefits of structural cost reduction, operational leverage across the supply base and improved buying. 

The Food business has delivered consistent growth and market share gains for the past four years, as it executes its strategy to become a shopping-list retailer. It is increasing its share of main basket spend and broadening family appeal through investment in trusted value, quality and innovation, supported by the continued expansion of larger stores.

Investment in value, quality and innovation
Like-for-like growth was broad-based, with core categories performing well. Food continued to invest in trusted value, with over £50m annualised investment in the period, helping drive volume growth and market share gains across key family categories including frozen, grocery and bakery.

Fresh food performance benefited from prolonged summer weather and the World Cup, which supported demand across seasonal categories.

Growth through larger Food stores and renewals
The sales contribution from new and expanded stores is increasing. Over the past five years, the average trading space of new Food stores has doubled, supporting a broader customer mission.
During the first half, Food space was opened, renewed or extended in 17 stores, with a particularly strong performance in new, larger locations converted from former Homebase units.

Supply chain capacity and productivity supporting future growth
The Food supply chain transformation programme remains on track, with the new distribution centre at Avonmouth expected to be supporting volumes through the peak Christmas period. Together with development of the Daventry DC, these investments are expected to provide more than 30% additional capacity while reducing cost per case. Prior to their opening, temporary space has been leased to support continued volume growth.

Together, these new distribution centres will strengthen the network, improve productivity and support the continued growth of the Food business into the 2030s.

FASHION, HOME & BEAUTY REBUILDING PROFITABILITY
Fashion, Home & Beauty’s ambition, set out in 2022, is to grow market share by at least 1% by 2027/28 and deliver an on-going operating margin over 10%. Given our large online customer base, significant opportunities remain to increase sales and profitability and to drive long-term growth through improvements to fulfilment, sourcing, buying and stock flow.

Sales increased 17.5% to £2.0bn, with like-for-like sales growth of 17.3%. Adjusted operating profit increased to £150.5m and operating margin to 7.5%, reflecting recovery from the disruption experienced in the prior year. Profit growth was partially offset by the weighting of marketing costs to the first half, and the planned phasing of structural cost reduction into the second half. 

Despite strong brand health indicators for quality, value and style and further market share growth, sales and profit remained below two years ago as the business did not maximise conversion of demand to sales. Availability was constrained due to the longer than expected impact of manual ordering processes following the incident, while profitability was diluted by an increased mix of online sales which have higher fulfilment costs.

Improved customer engagement, with sales impacted by availability
Menswear continued to perform strongly, driven by improvements in product. In womenswear, sales conversion was affected by availability in selected core lines and sizes, due to the impact of the incident. The balance of the range also moved too far towards trend-led newness in some categories.

Ahead of Autumn/Winter, Fashion, Home & Beauty has improved core product availability, through improvements in stock flow and inventory management, while maintaining seasonal newness.

In September, M&S announced a new partnership with Sephora, creating a new beauty destination in selected stores and online from Spring 2027, which is expected to broaden customer appeal, strengthen the Beauty proposition and create opportunities for growth.

Performance reinforces the benefits of store rotation
The store rotation programme aims to create a more focused, productive estate of Full Line stores in growth locations, with increased choice and a better customer experience.

Larger, modern stores continue to outperform. Nonetheless in the first half, overall store sales declined by 5.2% versus 2024/25 as demand continued to shift online during the prolonged summer heat, which was most evident in high street store performance. Online sales increased by 11.2% versus 2024/25, adjusted for the exit from bulky furniture, with online sales participation increasing to 35% from 33% in 2024/25.

The recently renewed Pantheon, Oxford Street flagship store is an example of the potential for larger, modern stores in growing locations and provides a test bed for future Fashion, Home & Beauty investment. Since reopening, sales on the Fashion, Home & Beauty floors have increased 27% versus 2024/25.

Improving availability and reducing cost to serve
The purpose of the end-to-end supply chain strategic programme is to drive better availability, improved fulfilment and lower costs.

M&S is improving planning, buying and merchandising systems and processes to strengthen inventory management, stock flow and product availability. Sourcing initiatives are aimed at increasing the buying margin of core ranges while reducing lead times across seasonal and fast-moving categories.

As online sales have grown, the mix of demand has shifted towards categories with higher customer returns rates. As a result, both fulfilment and returns volumes have increased faster than sales, increasing operating costs and operational complexity, and reducing FH&B operating margin.

This is being addressed with investment in the acquired Lichfield distribution centre and a new, dedicated returns warehouse in Sheffield, which will significantly reduce the handling time and costs involved in returns. Alongside this, capacity improvements at Castle Donington will increase operational efficiency.

Availability and stock flow performance is improving. The actions underway are expected to deliver stronger sales, generate cost savings and drive more profitable growth over time.

Improved customer engagement, with sales impacted by availability
Menswear continued to perform strongly, driven by improvements in product. In womenswear, sales conversion was affected by availability in selected core lines and sizes, due to the impact of the incident. The balance of the range also moved too far towards trend-led newness in some categories.

Ahead of Autumn/Winter, Fashion, Home & Beauty has improved core product availability, through improvements in stock flow and inventory management, while maintaining seasonal newness.

In September, M&S announced a new partnership with Sephora, creating a new beauty destination in selected stores and online from Spring 2027, which is expected to broaden customer appeal, strengthen the Beauty proposition and create opportunities for growth.

Performance reinforces the benefits of store rotation
The store rotation programme aims to create a more focused, productive estate of Full Line stores in growth locations, with increased choice and a better customer experience.

Larger, modern stores continue to outperform. Nonetheless in the first half, overall store sales declined by 5.2% versus 2024/25 as demand continued to shift online during the prolonged summer heat, which was most evident in high street store performance. Online sales increased by 11.2% versus 2024/25, adjusted for the exit from bulky furniture, with online sales participation increasing to 35% from 33% in 2024/25.

The recently renewed Pantheon, Oxford Street flagship store is an example of the potential for larger, modern stores in growing locations and provides a test bed for future Fashion, Home & Beauty investment. Since reopening, sales on the Fashion, Home & Beauty floors have increased 27% versus 2024/25.

Improving availability and reducing cost to serve
The purpose of the end-to-end supply chain strategic programme is to drive better availability, improved fulfilment and lower costs.

M&S is improving planning, buying and merchandising systems and processes to strengthen inventory management, stock flow and product availability. Sourcing initiatives are aimed at increasing the buying margin of core ranges while reducing lead times across seasonal and fast-moving categories.

As online sales have grown, the mix of demand has shifted towards categories with higher customer returns rates. As a result, both fulfilment and returns volumes have increased faster than sales, increasing operating costs and operational complexity, and reducing FH&B operating margin.

This is being addressed with investment in the acquired Lichfield distribution centre and a new, dedicated returns warehouse in Sheffield, which will significantly reduce the handling time and costs involved in returns. Alongside this, capacity improvements at Castle Donington will increase operational efficiency.

Availability and stock flow performance is improving. The actions underway are expected to deliver stronger sales, generate cost savings and drive more profitable growth over time.

Source : Marks & Spencer

Image : Marks & Spencer

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