Company Reports

In a fiercely competitive UK marketplace, Marks & Spencer underperformed for the better part of a decade, highlighting the difficulty in developing competitive advantages in the apparel and grocery sectors. The 200-year-old firm is exposed to disruption from new players such as price-led discounters and online retailers. In 2016, a fresh transformational plan was implemented. Although slow initially, postpandemic progress has been material, with new management at the helm in 2022.

In a fiercely competitive UK marketplace, Marks & Spencer underperformed for the better part of a decade, highlighting the difficulty in developing competitive advantages in the apparel and grocery sectors. The 200-year-old firm is exposed to disruption from new players such as price-led discounters and online retailers. In 2016, a fresh transformational plan was implemented. Although slow initially, postpandemic progress has been material, with new management at the helm in 2022.

Marks & Spencer's full-year fiscal 2026 results included a food operating margin of 4.6% and fashion operating margin of 5.5%, both down from the prior-year period due to the cyberattack in April 2025. Shares rose around 4% in early trading on May 20.

Marks & Spencer’s third-quarter trading statement included like-for-like food sales growth of 5.6% and a 2.9% decline in fashion sales. Ocado Retail sales were up 13.7%. Shares rose around 3% at the Jan. 8 market open.

Marks & Spencer’s first-half fiscal 2026 earnings included a 7.8% increase in food sales and a 16.4% decrease in fashion sales. Group adjusted profit before tax more than halved, hit by the cyberattack in April 2025. Shares were flat at the market opening on Nov. 5.

In a fiercely competitive UK marketplace, Marks & Spencer underperformed for the better part of a decade, highlighting the difficulty in developing competitive advantages in the apparel and grocery sectors. The 200-year-old firm is exposed to disruption from new players such as price-led discounters and online retailers. In 2016, a fresh transformational plan was implemented. Although slow initially, postpandemic progress has been material, with new management at the helm in 2022.

In a fiercely competitive UK marketplace, Marks & Spencer underperformed for the better part of a decade, highlighting the difficulty in developing competitive advantages in the apparel and grocery sectors. The 200-year-old firm is exposed to disruption from new players such as price-led discounters and online retailers. In 2016, a fresh transformational plan was implemented. Although slow initially, postpandemic progress has been material, with new management at the helm in 2022.

Marks and Spencer reported its full-year fiscal 2025 results, with sales growth of 6.1% and operating profit growth before adjusting items of 17.4%. Shares were up nearly 4% on May 21.

We maintain our GBX 342 fair value estimate after no-moat Marks and Spencer reported its trading statement for the 13 weeks to Dec. 28, 2024, which met our expectations. While results were decent, sales growth undershot the market’s high expectations, causing the stock to drop approximately 6% upon results. We view current shares as fairly valued.

We relaunch coverage of Marks & Spencer, with a no-moat rating, Standard Capital Allocation Rating, and Medium Uncertainty Rating. Our fair value estimate is GBX 342, which places the stock in 2-star territory. While headwinds in the UK have dampened consumer confidence in recent years, we see an improving environment on the horizon that should benefit M&S. Still, we prefer consumer staples names under our coverage with more defensive qualities.

In a fiercely competitive UK marketplace, Marks & Spencer underperformed for the better part of a decade, highlighting the difficulty in developing competitive advantages in the apparel and grocery sectors. The 200-year-old firm is exposed to disruption from new players such as price-led discounters and online retailers. In 2016, a fresh transformational plan was implemented. Although slow initially, postpandemic progress has been material, with new management at the helm in 2022.

We are taking a fresh look at our underlying assumptions for Marks & Spencer. We're placing the shares under review while we reexamine our thesis, model, and moat rating.

Ocado Retail, a joint venture between Ocado Group and Marks & Spencer, reported its third-quarter trading update, showing strong performance with retail revenue up 15.5% year on year to GBP 658 million. Volume growth (total items) increased by 15.4%, while average orders per week rose 14.7% to 437,000. The number of active customers grew by 10.3% to 1.06 million, indicating that more customers are shopping with Ocado more frequently due to improved service offerings and better value perception.

Marks & Spencer reported strong fiscal 2024 results with market share gains across clothing and food. Group sales were up 9.4%, driven once again by food sales, which were up 13%, with like-for-like sales up 11.3% driving volume and market share gains to 3.7% from 3.55%. However, more importantly, consistent volume growth was ahead of the market, up 6.7% and 9.7% in the fourth quarter and third quarter respectively versus flat for the market, according to Kantar. The food segment's adjusted operating profit of GBP 395.3 million implies a margin of 4.8% versus GBP 248 million and 3.4% margin respectively last year with the remarkable improvement reflecting operating leverage and benefits from sourcing and structural cost-savings. The clothing and home division grew by 5.3% (like-for-like sales up 5.2%) leading to robust market share gains of 10% from 9.6%, according to Kantar. The clothing and home segment's adjusted operating profit increased to GBP 403 million or a 10.3% margin, from GBP 324 million and 8.7% respectively last year as a result of higher gross margins, in turn, supported by full-price sales and cost-savings. The international business' priorities have been reset under the new leadership to build a stronger foundation for long-term growth and address the recent and persistent underperformance as sales continue to disappoint, being down 1% in the year. Ocado Retail had previously reported sales growth of 11.2% and adjusted EBITDA of GBP 26.8 million with Marks & Spencer's share of the adjusted loss increasing though due to higher interest costs.

Ocado Retail, a joint venture between Ocado Group and Marks & Spencer, reported a first-quarter trading update for the 13 weeks to March 3, 2024, with retail revenue up 10.6%, including volume growth up 8.1% and the average sales price, or ASP, up 2.2%. The ASP was lower than market inflation, reflecting the online grocer's efforts toward value perception. Ocado Retail's good performance was driven by: 1) customer growth of 6.4% to 1,018,000, 2) growth in average orders per week of 8.4% to 414,000, and 3) the average basket value increased by 2.1%—in turn due to the higher ASP (lower than inflation) with a slightly lower basket size at 45 items per order (down 0.2%). The company maintained 2024 guidance: it expects Ocado Retail to grow at a high-single-digit rate versus 8% in our model and EBITDA margin to be around 2.5%.

Ocado Retail, a joint venture between Ocado Group and Marks & Spencer, reported a fourth-quarter trading update for the 13 weeks to Nov. 26, 2023, with retail revenue up 10.9% (versus 5% in the first half and 7.2% in the third quarter) including volume growth up 4.8% and the average sales price up 5.4%. The ASP was lower than market inflation, reflecting the online grocer's efforts toward value perception. Ocado Retail's good performance was driven by: (1) customer growth of 5.9% to 998,000, (2) growth in average orders per week of 6.3% to 407,000, and (3) the average basket value increased by 3.8%—in turn due to the 5.4% higher ASP (lower than inflation) with a flat basket size at 44 items per order, which was stable sequentially. The company maintained 2024 guidance: it expects Ocado Retail to grow at a mid-single-digit rate versus 5% in our model and EBITDA to be positive, mainly driven by improved capacity utilization.

In a fiercely competitive United Kingdom retail marketplace Marks & Spencer Group's underperformance is yet another sign of the difficulty in developing competitive advantages in the retail sector, leaving it exposed to disruption from new players such as price-led discounters and online retailers. When new management took over in 2016, a fresh transformational plan was implemented. Although slow at the beginning, progress has been material postcoronavirus, with the company aggressively slashing costs at a rapid pace in light of strong headwinds for its nonfood business caused by pandemic-driven lockdowns.

Marks & Spencer reported another robust trading update for the third quarter of fiscal 2024. Group sales were up 7.2%, driven once again by food sales, which were up 10.5% (like-for-like sales up 9.9%), driving volume and market share gains. This rendered Marks & Spencer the top-performing grocer in volume growth terms over Christmas and the third quarter with growth of 7%, driven by more customers being served over this period. The clothing and home division grew by 4.8% (like-for-like sales up 4.8%) with average selling price growth contributing the most and driven by fewer promotions. International sales were disappointing, down 6.4%, driven by the planned timing of shipments in the Middle East and Asia and more challenging market conditions in India. Management remains cautious about its outlook. We don't expect to materially change our GBX 185 fair value estimate for Marks & Spencer after accounting for third-quarter results. Shares trade in 2-star territory.

Marks & Spencer reported another robust set of results in its fiscal 2024 half-year. Group sales were up 10.8% driven once again by food sales, which were up 14.7% (like-for-like sales up 11.7%), driving volume and market share gains against mainline grocers. The clothing and home division grew by 5.7% (like-for-like sales up 5.5%) with resilient full-price sales and the click-and-collect channel (reduced fulfillment costs) contributing to improved profitability. International and Ocado Retail sales were up 3.9% and 6.9%, respectively. On profitability, the adjusted operating margin recovered to 4.3% from 2.2% last year in food, driven by volume growth and manufacturing efficiencies. Margins in clothing and home also recovered to 12.1% from 9.8% last year, supported by a higher proportion of full-price sales (82%), cost-savings in the logistics network, and lower freight rates than anticipated. Management remains cautious about its outlook and said it expects profit before tax and adjusting items to be weighted toward the first half. Profit-before-tax and adjusting items were ahead at GBP 360.2 million versus GBP 205.5 million last year. Marks & Spencer's share of Ocado Retail's net income-to-group results was negative GBP 23.4 million due to the continued effect of costs related to new and excess capacity. Given the widespread improvement in operating performance across the business and a stronger balance sheet, and as previously announced, the firm is restoring a modest annual dividend to shareholders (GBX 1 per share). We don't expect to change our GBX 185 fair value estimate for Marks & Spencer after accounting for these results. Given the strong beat in top-line growth and profits, shares were up as high as 9% intraday, pushing the stock further into 2-star territory.

Ocado Retail, a joint venture between Ocado Group and Marks & Spencer, reported a third-quarter trading update for the 13 weeks to Aug. 27, 2023, with retail revenue up 7.2% (versus 5% in the first half) and a return to positive volume growth in the last month of the quarter. Ocado Retail's good performance was driven by: 1) customer growth of 1.5% to 961,000; 2) growth in average orders per week of 1.9% to 381,000; and 3) the average basket value increasing 4.2%—in turn due to 8.4% higher average selling price (lower than inflation), offset by smaller basket sizes (at 44 items per order, stable sequentially). The company maintained 2023 guidance, expecting Ocado Retail to grow at a mid-single-digit rate (versus 5% in our model) and be marginally positive, mainly driven by a second-half return to volume growth and improved capacity utilization.