Marks & Spencer signals higher shareholder returns as balance sheet strengthens

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Marks & Spencer boosts returns

Highlights

Marks & Spencer ended the 2025/26 financial year with net funds of £338.2 million and plans capital expenditure of £650 million to £750 million in 2026/27, focusing two-thirds on long-term food growth.
The company forecasts a return to profit growth in the current year after a 24% decline due to a cyberattack, and raised its full-year dividend by 16.7% in May.
Management targets consistent high single-digit revenue growth, double-digit profit growth, and aims to double food sales, while reviewing refrigeration investments after June's heatwave exposed vulnerabilities.

Capital allocation plan for 2026-27

As reported by Reuters, finance chief Alison Dolan tells Marks & Spencer's annual shareholders' meeting that the group has a robust balance sheet, a net funds position and a strong investment-grade credit rating, giving it room to invest and increase returns to shareholders over time.

Dolan says the retailer expects to become clearer during the current 2026-27 financial year on its policy for higher shareholder returns and on the timing of those distributions. Marks & Spencer ends the 2025/26 financial year with net funds, excluding lease liabilities, of 338.2 million pounds, and plans capital expenditure of 650 million pounds to 750 million pounds in 2026/27, with about two-thirds aimed at long-term growth in food.

In May, the company forecasts a return to profit growth in its current year after a 24% slump caused by the impact of a cyberattack in the year ended March 28, 2026, and raises its full-year dividend by 16.7%. Shares in Marks & Spencer are up 16% so far this year.

Food growth and store resilience in Britain

Chairman Archie Norman tells investors the group enters its new financial year in "fighting fit form" and says it wants to deliver consistently high single-digit revenue growth and double-digit profit growth.

Marks & Spencer currently holds a 4.1% share of Britain's grocery market, or 4.6% including products sold through Ocado, and says its long-term ambition is to double food sales. Chief executive Stuart Machin also says June's heatwave exposed pressure on store refrigeration, with fridges struggling during nine days of extreme heat, and the company is now reviewing refrigeration across the estate and investing in equipment for new stores that can cope with temperatures of 45 degrees Celsius.

Our earlier coverage of British American Tobacco’s share buyback highlighted how the company’s repurchases reduced its share count as part of a capital return strategy. We also noted that the free-float adjustment can prompt UK transparency-related disclosure reviews, while the stock’s technical setup stayed broadly bullish but with mixed momentum signals and a risk of near-term consolidation.

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