Marks & Spencer has reaffirmed its ambition to double food sales over time as it outlined plans to grow profits faster than sales.
It used its capital markets day on November 10 to set out the next phase of its transformation, targeting annual sales growth in the mid-to-high single digits over the medium term.
Food remains central to those ambitions. The division has increased annual sales by more than 50 per cent since 2021/22 and is targeting further market share gains alongside an operating margin of around five per cent.
M&S said continued investment in its customer offer and operating model would support growth, improve productivity and help control costs. It remained on track to deliver £600 million of structural savings by 2027/28.
M&S has seen a strong first half for its food business, with sales rising 13.9 per cent to £5.2 billion in the six months to September 26.
Food volumes increased 11.9 per cent, while adjusted operating profit reached £288.6 million, delivering a margin of 5.6 per cent. M&S said it had attracted 1.5 million additional food customers over the past two years as it sought to capture more of families’ regular grocery spending.
Speaking alongside last week’s results, chief executive Stuart Machin said: “Our Food business is ahead, delivering double-digit volume growth in a flat market.”
Online grocery also contributed to the momentum. Sales of M&S food through Ocado Retail rose 22.8 per cent, with its products accounting for 30.9 per cent of the average basket.
The ambition to become a bigger destination for the weekly shop is being supported by substantial investment in distribution capacity.
As previously reported by Retail Gazette, M&S began construction on a £340 million automated food distribution centre in Northamptonshire in May.
The 1.3 million sq ft facility is scheduled to open in 2029 and serve more than 200 M&S Food stores. The retailer’s largest-ever supply chain investment is designed to increase capacity, improve availability and reduce long-term costs.
Automation will include pallet cranes, high-speed shuttles and hands-free picking, while changes to deliveries and replenishment are intended to free store colleagues to spend more time serving customers.
M&S has also deployed forecasting and replenishment technology from RELEX across its food operations, covering 1050 stores and 13 distribution centres in the UK and Ireland.
The system draws on sales history, weather, promotions and pricing to help predict demand and manage stock, particularly in fresh and chilled categories.
However, the wider group’s recovery remains uneven. Retail Gazette reported last week that fashion and home profits remained below pre-cyberattack levels, despite a rebound in sales.
Group adjusted pre-tax profit more than doubled year on year to £403.2 million, but the fashion, home and beauty division continued to face availability constraints and higher fulfilment costs.
Alongside its growth targets, M&S announced plans to double its full-year dividend for 2026/27 to 8.4p a share from 4.2p. It said maintaining a strong balance sheet and investment-grade credit rating remained priorities as it balanced investment with increased shareholder returns.
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