Marks and Spencer Earnings: Solid Full-Year Results, But Cyberattack is a Setback

We think the firm can achieve profitable growth.

Verushka Shetty 21 May, 2025 | 4:13PM
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Editor's Note: This analysis was originally published as a stock note by Morningstar Equity Research.

Key Morningstar Metrics for Marks & Spencer


What We Thought of Marks & Spencer’s Earnings

Marks and Spencer MKS 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.

Why it matters: The firm continues to outperform the United Kingdom market, signaling success in its transformation thus far. Once Marks and Spencer overcomes its cyberattack setback, we think the firm can achieve profitable growth supported by cost efficiency initiatives, store rotation progress, and organizational changes in the international segment.

UK food like-for-like sales increased 8.6%, driven by volume growth. UK clothing like-for-like sales grew 4.4%, supported by increased online penetration. International sales declined 7.1% in constant currency, with stronger performance in the second fiscal half compared with the first half.

Operating margins for food and clothing segments were 5.4% and 11.2%, respectively, ahead of targets. Margin expansion was driven by GBP 120 million in cost savings. The Ocado Retail joint venture losses continued to weigh on full-year earnings, with elevated delivery costs and site closures.

The bottom line: We plan to keep our GBX 342 per share fair value estimate for no-moat Marks and Spencer and view current shares as fairly valued. The cyberattack disruption is expected to have a GBP 300 million negative impact on fiscal 2026 profitability, which is higher than our initial expectations. Marks and Spencer expects to resume online sales in the coming weeks.

While we have baked in the near-term hit from the cyberattack into our forecasts, we do not expect a material long-term impact. With this, our midcycle forecasts remain intact.

In fiscal 2026, the firm expects capital expenditure between GBP 600 million and GBP 650 million. We view this as appropriate as the firm accelerates its transformation initiatives.


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About Author

Verushka Shetty  is an associate equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc

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