Stock story: Marks & Spencer
In this series, we highlight a company with an interesting stock market backstory. Happy reading…
Why are they #worthwatching?
Okay, in the interest of not avoiding the elephant in the room, as we write this piece, M&S, along with other retailers, has suffered a horrific cyber-attack that is set to cost the company millions of pounds in lost operating profit.
Despite this massive setback, M&S is still worth watching because they are another one for our comeback kids list. Five years ago, M&S was on the down and out. The business was unwieldy and drab and had not stayed in vogue with the consumer. They dropped out of the FTSE100 and were battling issues at every end, from poor profits to poor systems, and had a general malaise affecting all categories, bar food. Step forward to 2025, and the story is so different. The malaise has lifted, and the ‘Reshape for Growth’ turnaround plan is working. They have put effort into modernizing operations, expanding digital, increasing efficiencies, and delivering growth opportunities across all categories, especially clothing.
They did this by hiring the right talent: Archie Norman, Chairman of the Board, Stuart Machin, CEO, and Maddy Evan, Director of M&S Woman, to name a few. They have transformed the supply chain, reevaluated store footprint, built up digital infrastructure, focused on quality ageless clothing, revamped their own brands, and brought in new brands such as Jaeger. We could go on; the list of positives is endless.
Is this turnaround sustainable? Please read the latest from M&S CEO here. See here how the stock market reacted thus far.
Change is palpable on a walk-through in-store or in the back-to-back viral products. M&S is cool again… who knew? It is showing up in financials as well. In the latest March 2025 results, profits rose 22% to £875.5m, before adjustments. It is the highest in 15 years. To quote Stuart Machin, CEO, “…it is a third consecutive year of growth in sales and market share, profit and return on capital.” Sales grew by 6.0%, and operating profit, excluding adjusting items, was 17.4%. Margin expansion is driven by £120m of cost savings, a bonus during these times, which has given room for a 20% higher dividend.
Fashion, Home, and Beauty total sales came in at £4.2bn, like for like sales up by 4.4% and operating margin 11.2%, vs. 10.7% from the same time last year. We are particularly excited about this momentum in fashion as it will mean they will continue to produce the quality pieces we want to keep in our wardrobes forever, as highlighted in our recent articles Goodmove and It Started With Navy Clothing.
The road ahead, past the ravages of the cyber-attack, may not be pretty, but M&S appears to still be dripping with confidence. Its CEO reportedly said, “… In our multiyear [turnaround] journey, four-and-a-half weeks is a short period of time, and now we’re getting back to business.”
Can they keep their convincing us with quality and stylish pieces and keep growing market share as well as operating margins? This is clearly not just about M&S Food; this is also about M&S Clothing! Here is some more information on their financials to further your understanding…
Highlights from end of Financial Year @29 Mar 2025 in GBP
Adj. Earnings per share = 32p vs. 25p in 2024
Adj. Return on Equity =10%
Dividends per share = 3.6p vs. 3.0p last year
Revenues =£13.8bn vs. £13.0bn prior year. Operating margin = 7.1% vs. 6.4% in 2024
Adj. Net margin = 2.1%
Cash = £864.5m
Debt = £2,955m
Debt/Equity =1.0x
Adj. Return on Assets = 3.3%
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