A stark difference between H1 and H2

After what M&S described as a “year of two halves”, the retailer has posted its full year results for the 52 weeks ending 28 March 2026. In H1 M&S were hit by a cyber-attack majorly impacting its online channel and stock management abilities, leading to an increase in waste and markdowns on products. Despite these challenges, M&S posted a 7% growth in food sales year on year (YoY), meaning the second half of the year showed significant growth and recovery driven by the strength of its food proposal and investments into store rotations and openings.

Store estate driving sales growth

M&S’ food offering has been attributed to the retailers fast recovery from the incident, with major investments into new stores, renewing stores, product ranges, and number of SKUs. At the back end of 2025 leading into 2026, M&S opened and renewed a significant amount of stores, including a new full-line flagship store in Bath featuring the modernised layout including a bakery, coffee shop, flower shop, and local market design. Further openings and renewals conformed to the modernised layouts featuring bakeries, hot chicken counters, cheese barges, and expanded ranges. This modernisation of the existing store estate and featuring of the full M&S food offering significantly contributed to the overall sales growth seen in the full year results and improved the retailers competitive standing among rivals.

Food figures make up for decline

In its results, M&S display an overall adjusted profit of £671.4 million, a 23.8% decrease from last years figure of £881.1 million, with operating profit also down 14% YoY, showing just how much the cyber-attacks impacted the retailer’s profitability as a business.

In H2 however, M&S reported an adjusted profit increase of 4.1% YoY, attributing the growth to the food business making up for the decline in fashion, home, and beauty. The figures given show that M&S’ core food business is an engine for growth able to withstand disruption and difficulties. M&S have identified this as well, announcing plans to double the size of its food business at the end of 2025, since then it has begun rotating stores to modern formats, and opening new food stores across the UK, with a plan in place to have 380 dedicated food stores by 2027/28. In 2025/26, M&S opened 12 new food stores and three full line stores, with plans to continue this momentum in the 2026/27 year.

This is paired with the continued expansion of ranges and innovation within its private label.  This will drive the food business to become even more prevalent and competitive within the market, with plans to generate loyalty and spend from family shoppers through increasing the SKUs available in its value ranges (“Remarksable Value”, “Dropped & Locked”, “Bigger Pack, Better Value”).

M&S’ strategy going forward

Looking toward 2026/27, M&S are focussing on investment into three main areas:

Regarding supply chain modernisation, M&S announced it has begun construction of a new automated distribution centre last week, as well as increasing capacity and automation to consolidate its supply chain network and support the volume growth seen right now and the continued volume growth the retailer plans to see.

Technology transformation through investments into integrating AI into its store processes by equipping store managers and store support centre colleagues with Microsoft 365 Copilot license, food warehouse management tools, and e-commerce platform improvements. The next stage for M&S technology transformation involves simplifying the technology estate and driving online growth, with the use of AI to support decisions on pricing, waste reduction, and personalised offers. Short-term plans for online improvements are focussed on search, imagery, check-out and payments.

In terms of store rotation, M&S plans to open 18 new stores and extending three stores to include the full M&S range. These investments work towards a wider plan to have 380 food stores by 2027/28 and doubling the size of its food business in terms of sales.

M&S detailed that its capital expenditure will increase to c£650m-£750m, with around 2/3rds of this expenditure being targeted towards the long-term growth of its food business. Through these investments, M&S expects to be back on track this year with profit growth expected to resume compared to 2024/25.

Pushing forward with its food business

Overall, M&S has shown resilience in its food business, through investment into its value, innovation, existing estate and new stores. M&S has shown that it can power through difficulties and return to growth quickly, showing strategic intelligence by identifying the food business as the main growth engine and the path to a return to growth. M&S will look to return to its previous levels of growth in the coming year with the food business at the centre of this push.