Marks and Spencer (M&S) has reported a steep fall in earnings for the year ended 28 March 2026, after a cyber incident in the first half of the financial year caused widespread operational disruption across the business.
Adjusted profit before tax declined 23.8% to £671.4m ($902.5m), while statutory profit before tax fell by a sharper 28.8% to £364.6m.
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Adjusting items totalled £292.1m, of which £131.3m was directly attributable to the incident.
Group revenue on a statutory basis climbed 25% to £17.27bn, largely reflecting the consolidation of Ocado Retail.
Stripping out that contribution, underlying sales grew 1.9% to £14.17bn.
The year was divided sharply in performance terms. The first half absorbed the bulk of the disruption while the second half saw adjusted profit recover to grow 4.1% year-on-year.
Food was among the more resilient divisions, with sales up 7%, though adjusted operating profit eased to £444.5m from £491.8m in the prior year, at a margin of 4.6%.
The drag came from elevated markdowns and waste in the first half, which was partially offset by volume growth as conditions normalised.
M&S CEO Stuart Machin said: “Food was our standout performer as more customers than ever chose M&S Food for its quality, innovation, and value. Performance accelerated in the second half, returns were strong, and we continue to outperform the market with the prospect of more growth to come.”
Fashion, Home & Beauty bore the heaviest impact. Sales fell 7.7% and adjusted operating profit collapsed to £213.4m from £478m, as an enforced pause in online trading disrupted stock flow and constrained availability.
The clearance of surplus seasonal stock – concentrated in the second half – further compressed margins, though the company noted an improvement in style perception metrics over the period.
International sales also declined, down 7.2%, partly due to delayed shipments to the Middle East in the final month of the year.
Despite this, adjusted operating profit in the segment edged up to £39.1m from £35.9m, supported by cost reductions as M&S began resetting franchise arrangements and developing new wholesale and online marketplace partnerships.
Across the group, structural cost savings of £89m were achieved during the year, which were channelled back into reinvestment and operational resilience.
Looking ahead, M&S said it anticipates a return to profit growth in 2026/2027 relative to 2024/2025.
The company acknowledged ongoing headwinds from fuel, freight, input costs, government tax levies, and regulatory pressures, and said these would be addressed through buying improvements, value reinvestment, and continued cost reduction.
Machin added: “That was an extraordinary year. We were laser-focused on our customers, worked incredibly hard to recover our business, and we came out stronger. Throughout, we were transparent with customers, and they rewarded us with their loyalty.”
