4 November 2026
If you are covering the latest results from M&S, please see the following comment from Lucy Rumbold, equity research analyst at Quilter Cheviot:
“M&S reported first half results with sales slightly ahead of expectations, driven by stronger-than-expected Food and Ocado performance. Group profit was in line with market expectations and guidance remains unchanged. Fashion, Beauty and Home has yet to fully recover from the cyber incident, but there are opportunities to improve profitability through the new distribution centres and expect further detail at next week’s capital markets day.
“Food continues to be the standout performer for M&S, with like-for-like sales growth of 11.7%, ahead of consensus by 2.5%. This is particularly strong against growth closer to 2% at Tesco and Sainsbury’s, reflecting continued market share gains as M&S captures more main-basket spend and broadens its appeal to families. The operating margin reached 5.6%, 50bps above 2024, demonstrating improving profitability alongside continued innovation; last year’s comparison was distorted by the cyber incident. Store expansion also continues apace, with strong performance from new, larger locations converted from former Homebase units.
“Meanwhile, in Fashion, Beauty and Home, sales increased 17.3%, but the operating margin of 7.5% remained below the level achieved two years ago, as the business did not fully convert demand into sales. Management has been struggling with a longer-than-expected reliance on manual order processes following the cyber incident. A higher online sales mix also diluted profitability, given the associated fulfilment costs. There is scope for margin improvement from the new Lichfield distribution centre, set to open in 2027, through greater automation, lower labour and fulfilment costs, reduced reliance on in-store fulfilment and additional capacity. While the results are somewhat disappointing, there is a clear opportunity to improve the segment’s profitability.
“Overall, the results were mixed, but Food remained strong and Ocado positively surprised. Although Fashion, Beauty & Home continues to face challenges, we see meaningful scope for recovery through the new distribution centres and increased investment in automation, leaving the longer-term investment thesis intact. At 11x next-twelve-month earnings, the valuation is inexpensive, with scope for a rerating as M&S continues its restructuring for growth.”
