M&S targets profit growth ahead of sales over medium term

Marks & Spencer Outlines Profit and Sales Growth Strategy Through 2027

Marks & Spencer's Medium-Term Growth Ambitions and Strategic Targets

LONDON, Nov 10 (Reuters) - British clothing and food retailer Marks & Spencer said on Tuesday its ambition is to achieve mid-to-high single-digit sales growth over the medium term, with profit growth ahead of sales.

M&S is hosting a Capital Markets Day. Below are the targets it will set out:

Food Division Growth Strategy

• For food, the targets are to double sales over time, having grown annual sales by more than 50% since FY22, continue to gain market share, and deliver an operating margin of around 5%

Fashion, Home, and Beauty Segment Objectives

• For fashion, home and beauty, it is targeting online participation towards 50% with 180 highly productive stores, while continuing to gain market share, and delivering operating margins of more than 10% in both channels

Online and Store Expansion Plans

• For its international division, it wants to build a more global M&S brand presence through capital-light channels

Investment and Operational Transformation

Productivity and Cost Reduction Initiatives

• Delivering these ambitions will require continued investment in the M&S proposition and the transformation of its end-to-end operating model, with the aim of driving productivity and operating leverage as the business grows

• M&S is on track to achieve its structural cost reduction objective of £600 million ($807 million) by FY28

Financial Strength and Shareholder Returns

Free Cash Flow and Dividend Policy

• With free cash flow expected in each of the next three years, M&S can invest for growth while increasing returns to shareholders

• Maintaining a strong balance sheet and investment-grade credit rating remain priorities

• M&S' full-year 2026/27 dividend will double to 8.4 pence from 4.2 pence. Thereafter, it is intended that dividends will grow at least in line with earnings

Recent Financial Performance

• Last week, M&S said its first-half profit rebounded from last year's cyberattack-hit level, but was down on a two-year basis as strong earnings from food failed to fully offset weakness in clothing

($1 = 0.7437 pounds)

(Reporting by James Davey, editing by Sam Tabahriti)