M&S’s interim results for H1 26/27 show food sales growth that continues to outpace much of the wider market, strengthening its position as a mainstream grocery destination and reinforcing its ambition to become a serious challenger to the UK’s supermarket giants.
For the 26 weeks to September 26, M&S food sales increased 13.9% to £5.16bn, while like-for-like sales rose 11.7%. Food volumes grew 11.9% despite what the retailer described as a flat market, helping group sales rise 16.2% to £9.26bn and adjusted pre-tax profit more than double to £403.2m.
Chief executive Stuart Machin said the performance demonstrated the success of M&S’s strategy to win a greater share of customers’ regular grocery spending.
“Our Food business is ahead, delivering double-digit volume growth in a flat market and we have momentum as the UK’s fastest growing grocer. One and a half million more customers are shopping with us and our continued focus on quality, innovation and value is appealing to more families, as we become more of a shopping list retailer,” he said.
Moving away from its traditional positioning
The results suggest M&S is moving beyond its traditional role as an occasional premium food destination. M&S had previously stated that it plans to double the size of its food business, meaning it would look to become more of a regular weekly shop destination. The results show that this plan remains on track, supported by continued investment in stores, technology and supply chain capabilities.
Online grocery growth is also contributing to that momentum through M&S’s partnership with Ocado Retail. The joint venture reported revenue growth of 16%, driven by a 14.3% increase in active customers as new customer acquisition and retention improved. Order volumes increased and M&S products accounted for a growing share of customer baskets, while higher throughput and operational efficiencies helped drive a turnaround in profitability. Operating profit reached £25.6m, compared with a £3.1m loss in the same period last year.
Fashion remains challenging
While food remains the standout performer, M&S acknowledged ongoing challenges in Fashion, Home & Beauty as ecommerce grows. The retailer said fulfilment and returns volumes have increased faster than sales due to a greater mix of online demand and higher-return product categories, adding cost and operational complexity.
To address this, M&S is investing in its acquired Lichfield distribution centre and a new dedicated returns facility in Sheffield, while capacity improvements at Castle Donington are designed to improve efficiency and reduce returns handling costs. [corporate….pencer.com]
The analyst’s view
Mark Crouch, market analyst at eToro, said M&S is giving “Britain’s supermarket giants increasingly good reason to look over their shoulders”, arguing that the retailer’s food offer is evolving from a destination for special occasions into a credible option for the weekly shop.
He added that while last year’s cyberattack could have derailed progress, M&S has emerged with its reputation intact and strong momentum heading into Christmas, though restoring fashion profitability remains the next key stage of its turnaround.
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