Marks & Spencer Earnings: Decent End to a Challenging Year

Key Morningstar Metrics for Marks & Spencer

• Fair Value Estimate
  : GBX 342
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : Medium

What We Thought of Marks & Spencer’s Earnings

Marks & Spencer MKS‘s full-year fiscal 2026 results included a food operating margin of 4.6% and fashion operating margin of 5.5%, both down from the prior-year period due to the cyberattack in April 2025. Shares rose around 4% in early trading on May 20.

Why it matters: Results were slightly ahead of our expectations, and we are impressed by the firm’s growth in second-half fiscal 2026 and gains in food market share despite its cyberattack setback. We view the effects, which are mostly mitigated, as temporary; accordingly, our medium-term forecasts are unchanged.

• The firm expects to return to profit growth in fiscal 2027. We anticipate that input cost inflation resulting from the Middle East conflict will be a headwind to profitability; however, the firm is confident it can mitigate the effects.
• The firm is increasing its capital expenditure, guiding to £740 million in fiscal 2027, compared with approximately £600 million capex in fiscal 2026. While its store renewal efforts have paid off thus far, the intense competitive environment in both segments will require continued investment.

The bottom line: We maintain our GBX 342 per-share fair value estimate for no-moat Marks & Spencer. At current levels, shares are fairly valued.

• There could be further share price upside in the coming months if Marks & Spencer achieves share gains in both segments; however, we are cautious about the impact of the Middle East conflict on consumer confidence in the UK.