M&S today (10 November) hosts a Capital Markets Day, at which it will provide an update on progress against its Reinvesting for Growth transformation agenda and set out its ambitions for the next phase of growth.
Building on the stronger foundations established over recent years, the British retailer’s ambition is to achieve mid-to-high single-digit sales growth over the medium-term, with profit growth ahead of sales.
M&S’ medium-term ambitions for its three accountable businesses, including fashion, home & beauty, are to increase online participation towards 50% with 180 highly productive stores.
It aims to continue gaining market share and delivering operating margins of more than 10% in both channels.
Internationally, it plans to build a more global M&S brand presence through capital-light channels.
Delivering these ambitions will require continued investment in the retailer’s proposition and the transformation of its end-to-end operating model, with the aim of driving productivity and operating leverage as the business grows.
The Group will maintain a disciplined focus on delivering target operating margins supported by accelerated cost reduction. M&S said it is on track to achieve its structural cost reduction objective of £600m by FY28 and its investments will help develop the next phase of savings.
Over the past four years, M&S has restored its balance sheet to investment-grade, moving to a net funds position with strong liquidity. With free cash flow expected in each of the next three years, M&S has the resilience and flexibility to invest in growth while increasing returns to shareholders.
The Group shared that maintaining a strong balance sheet and investment-grade credit rating remain priorities.
Within this context, the full-year 2026/27 dividend will double to 8.4p from 4.2p. Thereafter, it is intended that dividends will grow at least in line with earnings over time.
This follows M&S' H1 results, where sales in its fashion, home & beauty division increased 17.5% to £1.99bn, while like-for-like sales grew 17.3%. Louise Deglise-Favre, lead apparel analyst at GlobalData, said the results showed that M&S’ fashion, home & beauty departments “have yet to realise its full potential".
“A 17.5% rise in sales looks impressive, but is largely flattered by a low comparative. Online sales rose 84.6%, while store sales fell 2.0%, with footfall being impacted by heatwaves in Q2. Compared with H1 two years ago, the picture is more sobering, with sales still lower than in H1 FY2024/25,” she added.
