Marks and Spencer Group plc
Annual Report and Financial
Statements 2026
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Introduction
1 Highlights of the Year
2 Chairman’s Letter
3 Chief Executive’s Review
4 Our Markets
5 Our Business Model
6 Stakeholder Engagement
andS.172 Statement
Strategic report
10 Strategic Progress
15 Our Key Performance Indicators
16 Financial Review
25 People and Culture
27 ESG Review
28 TCFD
40 Non-Financial and Sustainability
Information Statement
41 Risk Management
43 Principal Risks and Uncertainties
48 Our Approach to Assessing
Long-Term Viability
Governance
49 Governance Overview
50 Our Governance Framework
51 Our Board
53 Board Activities
55 Board Review
56 Nomination Committee Report
58 ESG Committee Report
60 Audit & Risk Committee Report
66 Remuneration Committee
Report
69 Remuneration at a Glance
71 Remuneration Policy
81 Remuneration Report
93 Other Disclosures
Financial statements
99 Independent Auditor’s Report
112 Consolidated Financial
Statements
118 Notes to the Financial
Statements
174 Company Financial Statements
176 Notes to the Company Financial
Statements
182 Group Financial Record
184 Glossary and APMs
190 Notice of Annual General
Meeting2026
201 Shareholder Information
203 Index
APM
Alternative performancemeasures
This report provides alternative performance
measures (‘APMs’) which are notdefined
orspecified under the requirements of
UK-adopted International Accounting
Standards. Webelieve these APMs provide
readers with important additional information
on our business.
We have included a glossary onpages 184 to
189 which provides a comprehensive list
ofAPMs that we use, including an explanation
of how they are calculated, how we use them,
andhow theycan be reconciled to a statutory
measure whererelevant.
* Includes consolidation of the results of Ocado Retail Limited from Ocado Group to M&S which was effective from 6 April 2025.
** Restated – see note 27 and the Glossary.
Financial Strategic
HIGHLIGHTS OF THE YEAR
Statutory revenue
£17.3bn*
24/25: +25.0%
25/26 17. 3
24/25 13.8
23/24 13.0
M&S Group adjusted profit
before tax
£671.4m
24/25: -23.8%
25/26 671.4
24/25
23/24
881.1
716.4
APM
Net funds excluding
lease liabilities
£338.2m
24/25: -24.4%
APM
Statutory profit before tax
£364.6m
24/25: -28.8%
25/2625/26 364.6338.2
24/2524/25 511.8447.6
**
23/24 672.545.7
Basic earnings per share
12.7p
24/25: -13.0%
25/26 12.7
24/25 14.6
23/24 21.9
Adjusted basic
earnings per share
23.8p
24/25: -25.4%
25/26 23.8
24/25 31.9
23/24 24.6
APM
New Full Line stores
3
24/25: +1
New Food stores
12
24/25: +4
25/26 3
24/25 2
23/24 6
25/26 12
24/25 8
23/24 8
Food: market share
4.1%
24/25: +0.2% pts
Fashion, Home & Beauty:
marketshare
10.2%
24/25: -0.3% pts
25/26 10.2
24/25 10.5
23/24 10
25/26 4.1
24/25
23/24
3.9
3.7
App percentage of online orders
58%
24/25: +4% pts
Raised for YoungMinds
£2.1m
24/25: -25%
24/25 54
23/24 44
24/25 2.7
23/24 1.7
25/26 58 25/26 2.1
23/24
Marks and Spencer Group plc Annual Report and Financial Statements 2026 1
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
CHAIRMAN’S LETTER
Scan the QR code to
hear more from Archie
and our highlights from
the year.
We are now
committing to a
multi-year capital
programme to drive
growth at M&S for
the next decade
andbeyond.
Dear Shareholder,
It would be an understatement
to say that this has been a
roller coaster year for M&S.
The cyber incident starting in April
coloured the financial performance for
the whole year and put many of our
financial ambitions into abeyance. It
wasalso a huge pre-occupation for
management, one of those “all hands on
deck” moments when leadership counts
and the team is really tested. We owe a
special thanks to our technology team
but also colleagues at all levels who
fought to keep the business going in the
most difficult of times. The long tail of
after-effects had a tapering impact on
our trading and availability right up to
year end. Of course there are many
lessons learned but the leadership
pulled together and fought hard to
secure the business and we have
emerged stronger for the experience.
Whilst the cyber incident distorted
financial performance in the year, we did
not lose sight of our mission to reshape
M&S into the business it can be. Indeed
despite the distraction, the strategic
progress continued and in some areas,
picked up pace. Whereas to date much
ofthe reshaping has involved fixing the
basics and proving the potential in our
product and formats, we are now at an
inflexion point where confidence in both
the strategy and management means
that we can accelerate investment. This
includes not only new store formats but
technology and supply chain. As a result,
we are now committing to a multi-year
capital programme to drive growth at
M&S for the next decade and beyond.
burden increased substantially in the
year. Our role is to sail into the wind and
ride the waves. The impact has however
been felt more keenly by smaller
competitors and the result is reflected in
the continued decline of many high streets
and town centres across the country.
We continue to operate our engaged
board model with a high frequency of
meetings, a bias for in person attendance,
and fluent interaction outside formal
board events. As the executive team has
increased in calibre and pace, so the
board has to evolve.
This year we said goodbye to two highly
valued board members, Justin King who
brought spark and colour to our board
discussions along with enormous depth
of knowledge and experience, and
Ronan Dunne who provided great
wisdom and camaraderie from a
different industry background. We are
fortunate to have two high calibre
replacements Sean Doyle, the CEO of
another great national brand, British
Airways, and Roger Burnley, former
CEOof Asda.
We enter the new financial year confident
in our strategy but more conscious than
ever of the strength we derive from
having one of the most loyal, committed,
and longstanding workforces in the
industry. Our colleagues at every level
went through some rough moments in
2025. Our culture is one where they are
all valued and everyone can have their
say and that is what keeps us strong.
Weare so grateful for their hard work
andcommitment.
Yours sincerely
Archie Norman
Chairman
Success in retail businesses is always a
talent game. So we are able to back our
programme to invest in growth, not just
because of the confidence we have in
high returns, but also because in the last
four years, the management team has
been substantially strengthened and
there is now a faster pace, to disciplined
process, and greater closeness to the
customer across the business. The vast
majority of the top 200 roles are now
occupied by colleagues who joined
thebusiness in the last eight years.
Forthemost part, the old slow moving
hierarchical attitudes of the past has
been replaced by a performance led
culture. The phrase “positively
dissatisfied” coined by Stuart Machin,
increasingly reflects the way the
business works day to day.
Our objective is to build a greater M&S
forthe decades to come, not always a
fashionable idea in this era of short term
shareholder returns. Our agenda is to
invest to generate mid to high single digit
growth in revenue and higher growth on
profit and earnings per share over the
medium term. Because there have been
so many false dawns in the history of M&S
however, it is important we keep our feet
on the ground: our tone will remain factual
and at times understated as we seek to
establish confidence in our programme.
Given our recent recovery of investment
grade debt rating and the macro-economic
and regulatory pressures we face, it
makes sense to keep a conservative
balance sheet during this phase of
accelerated growth and investment.
We have of course some headwinds:
there has rarely in the history of M&S
been a time where the regulatory
environment has been less friendly
togrowth and investment and our tax
Marks and Spencer Group plc Annual Report and Financial Statements 20262
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
CHIEF EXECUTIVE’S REVIEW
Scan the QR code
tohear more from
Stuarton our
performance.
We have a renewed
sense of purpose
that you can feel
around the business
today: fast paced,
still positively
dissatisfied, and
always aiming
higher.
This was an extraordinary year
for M&S. We stayed focused on
our customers and colleagues
while working incredibly hard
to recover our business, and
we came out stronger.
At all times, we were transparent about
the challenges we were facing. Our
priority was to do the right thing for
ourcustomers and they remained loyal,
voting us the UK’s most trusted brand
according to YouGov, something which
we never take for granted. We thank
everyone who shopped with us and aim
to serve them better every day.
A resilient balance sheet supported by
the hard work done in recent years to
improve cash generation allowed us to
absorb the costs of disruption without
compromising our financial health. With
strong net funds we continued our
transformation at pace, completing our
most ambitious year of store renewals in
a decade, alongside significant advances
in supply chain and digital capability.
Food was our standout, as more
customers than ever chose M&S
Foodforits quality, innovation and
value.Performance accelerated in the
second half, returns were strong, and we
continued to outperform the market with
the prospect of more growth to come.
We now look forward. The next three
years are among the most important
inour history. Retailers face a triple
whammy of external headwinds:
increased taxation, more regulatory
burden and ongoing global conflict,
butat M&S there is much within our
control. We are unshaken by short-term
events, running the business for today
byimproving how we serve, remaining
product obsessed and driving better
value, and investing for tomorrow
byimplementing our key
transformationpriorities.
I have always said that our job is
toprotect the magic of M&S while
modernising the rest. Now we’ve got the
momentum to do that at pace. We have a
strong culture, a hardworking, focused
team, and a growth business. There’s an
extraordinary opportunity ahead, and
we are on it.
Stuart Machin
Chief Executive Officer
In Fashion, Home & Beauty, we delivered
leading style credentials at the best
possible value, and this resonated with
customers. Recovery has taken longer,
but there is strong growth potential.
Tosupport this, we have accelerated
supply chain improvements, and our
newly acquired, fully automated Lichfield
site will increase capacity and deliver
new styles to customers faster.
We also continued with the reset of our
International business, investing in
value, building strategic partnerships
and identifying new growth opportunities.
Our progress this year would not have
been possible without the exceptional
commitment of colleagues across every
part of M&S, and I thank each of them for
their part. At all times we were front
footed, sleeves rolled up, forging the
culture we need to transform. We have a
renewed sense of purpose that you can
feel around the business today: fast
paced, still positively dissatisfied, and
always aiming higher. We are evolving our
people plan to match, injecting fresh
senior talent into our community of
experienced leaders. On the Executive
Committee we have further strengthened
our team with the appointments of Thinus
Keeve as Retail Director, Hayley Tatum as
Chief People Officer, and Alex Doorey as
Corporate Affairs Director, and in our
wider team we have welcomed experts
who can lead our transformation journey,
particularly in Fashion, Home & Beauty.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 3
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
OUR MARKETS
Focus on Value
What’s the trend?
•
This year customers continued to feel pressure on
household budgets which meant being careful with
spending. Insight from the Collective, a community of
43,000 M&S Food customers, put cost of groceries among
the top three things they are most worried about.
•
Value today is not just about paying the lowest price.
Customers want to feel confident they are making a
smartchoice - something that is good quality, fairly
pricedand worth coming back to - as well as being
rewarded for their loyalty.
•
This means customers are planning meals more
carefully, choosing to eat in more and watching how
they spend, actively looking for the best balance
between price and quality, rather than simply choosing
the cheapest option. When spending, they expect
products to meet high standards.
•
This is true across both Food and Fashion. Customers are
choosing products they trust, that offer reassurance on
quality, and that they feel represent good value.
How M&S is responding
•
M&S has continued to invest in trusted value, focusing
onlower prices where they matter most, without
cuttingcorners.
•
In Food we responded by expanding our Remarksable
value range even further, adding more family staples from
beef mince to washing up liquid, with both sales and
volume growth increasing year on year.
•
As a result, in January M&S was rated the fastest growing
major retailer for families, as more households chose M&S
for everyday food shopping.
•
In Fashion, Home & Beauty, we know that trusted value
issomething our customers turn to M&S for. To reinforce
this, we launched our Value You Can Trust campaign,
highlighting some of our best value products. A standout
product was our £30 womenswear barrel jeans which
combine modern design, and multiple fits at an accessible
price. We also sold two million £10 bras in the year.
•
In January we also held prices on school uniform for the
fifth year in a row, helping families manage back to school
costs and introducing a one-year quality guarantee on all
kids’ clothing, giving parents extra confidence that clothes
are made to last.
•
Together, these actions help customers feel that
M&Soffers fair prices they can trust, especially on
everyday essentials.
Health & Wellbeing
What’s the trend?
•
Health remains the biggest priority of M&S customers.
People want to feel better now and also protect their
future health.
•
71% of M&S Food customers said they are seeking to
maintain a balanced diet to be fit and healthy and yet
with cost of living pressures not going away. ‘Health
and Wealth’ are often competing priorities.
•
People want to live well, look after their physical and
mental wellbeing, and take a more preventative
approach to health.
How M&S is responding
•
M&S continued to lead the market in health perception as
rated by YouGov, and we remained focused on supporting
customers to prioritise their health.
•
In Food this year we launched a Nutrient Dense range,
developed by M&S chefs and nutritionists, to help
customers get more fibre, vitamins and minerals even
when eating smaller portions.
•
We also published ‘Bridge Britain’s Fibre Gap’, a white paper
highlighting that most UK adults are not getting enough
fibre and calling for clearer labelling and bettersupport.
•
In Fashion, Home & Beauty, health and wellbeing choices
show up in different ways from activewear to adaptive
clothing, and this year we became the first UK high
street retailer to launch stoma underwear with two new
menswear and kidswear ranges, building on the success
of the women’s stoma range. Developed with people
living with a stoma, the underwear is designed to offer
comfort, discretion and confidence in everyday life.
•
Meanwhile we also maintained our commitment to
support young people’s mental health, by committing to
raise a further £1.5m for YoungMinds, building on the
£5.5m already raised through colleague and customer
support. This year we raised £2.1m, bringing the total for
this partnership to £6.6m so far.
Investment in
Technology
What’s the trend?
•
Expectations are rising around personalised offers,
convenience and ease of use. Rather than being seen as
something separate or disruptive, technology is now
woven into how people plan, shop, eat and look after
themselves. Digital Loyalty programmes are on the rise
with 97% ofpeople saying they use loyalty cards.
•
Customers are turning to technology for inspiration and
efficiency. Digital platforms are supporting everything
from meal ideas and outfit planning, to smarter shopping
habits, while social media continues to shape discovery
and influence purchasing decisions. 63% use social media
to inspire meals or influence purchases; 40% have bought
afood product after seeing it on social media.
•
At the same time, businesses are increasingly using
technology to support colleagues and improve
day-to-dayoperations.
How M&S is responding
•
Technology and AI are a core part of our strategy,
helping us build the M&S we need to be. This year, we
launched several initiatives to make shopping at M&S
easier and more rewarding, while also rolling out
technology to better support our colleagues.
•
This year we announced the roll-out of Microsoft Copilot
licences to 11,000 colleagues, including all Store
Managers. These tools will support everyday tasks such
as creating rotas, summarising data and preparing
handovers, reducing admin and freeing up time for
colleagues to focus on customers on the shop floor.
•
We increased the use of data, forecasting and
technology behind the scenes to support better stock
management, improve product availability and enable
faster, more informed decisions.
•
In April 2026, we launched a transformed Sparks loyalty
programme hosted on the M&S app, with enhanced data
and personalisation at the heart. Customers now earn
real money rewards through a digital Sparks wallet, with
personalised offers shaped by how and where they shop,
powered by a suite of transformed AI and data
capabilities now powering Sparks.
Marks and Spencer Group plc Annual Report and Financial Statements 20264
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Creating value for all stakeholders
CUSTOMERS COLLEAGUES SHAREHOLDERS
SUPPLIERS PARTNERS COMMUNITIES
OUR BUSINESS MODEL
M&S is a leading British retailer, bringing exceptional quality,
value, service and innovation to our 34m customers, whenever,
wherever and however they want to shop with us. Our vision
isto be the most trusted retailer, doing the right thing for our
customers, withquality products at the heart ofeverything
we do.
Distinctive and exceptional
products, trustedbrand
M&S offers exceptional quality own-brand
products at value customers can trust.
Innovationis at the heart of the design and
development of our products, which are
sourcedwith care, through longstanding
trustedsupplier partners. M&S has full
ownershipof product creation – from recipes
totechnical specifications – controlling the
fullP&L on everyproduct sold. In Food, quality
perceptions remain strong, with volume and
value growing against the market. In Fashion,
wehave maintained a leading position across
quality and value, with style perceptions
continuing to rise.
Closer to customers
34m customers shopped with M&S this year
with97% of the UK population living within
25minutes of an M&S store. Central to our
‘sleeves rolled up’ culture is a focus on getting
closer to customers so we can continuously
improve our products and deliver brilliant
service. M&S has been voted the UK’s best
brand(source: YouGov) for the past four
yearsand that is something we never take
forgranted.
Closer to colleagues
Our 64,000 colleagues all have a role to play in
reshaping M&S and delivering for our customers.
They bring extraordinary passion for the business
and extensive technical expertise in areas such as
sourcing, design, product development, data and
technology. Read more about how we are driving a
high-performance culture on pages 25 to 26.
Omnichannel capability
M&S has 1,059 UK-owned and franchise stores,
connected to our network of digital shopping
channels. This includes our Fashion, Home &
Beauty website and app, with 30% of sales
through online channels. 57% of all online and
app orders are picked up by customers in-store,
using our Click & Collect service. M&S has a 50%
investment inOcado Retail, which has been the
fastest growing retailer for the last two years.
M&Salso has a presencein70 markets including
Europe, the Middle East, Asia, the US and Australia.
Strong supplier and partner
relationships
As an own-brand retailer, our strong strategic
partnerships with suppliers are essential to
delivering quality, value, style and innovation
forour customers. These long-term, differentiated
partnerships support investment inmore sustainable
solutions and give us specialised capabilities.
What makes
usM&S?
Read more about our Strategic Progress on pages 10 to 14.
Read more about our approach to ESG at corporate.marksandspencer.com/ESGreport2026.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 5
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
M&S
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STAKEHOLDER ENGAGEMENT AND S.172 STATEMENT
Understanding what matters most to our
stakeholders is key to achieving M&S’
vision of being the most trusted retailer.
Engaging with these stakeholders helps shape the
Board’s decisions and guide how the directors fulfil
their responsibilities under Section 172(1) (a) to (f) of
theCompanies Act 2006 (s.172). The directors confirm
that, during the year, they have acted in good faith in
away that best promotes the success of M&S for the
benefit of shareholders as a whole. In doing so, they
have had regard for the interests of all M&S stakeholders,
while preserving our reputation and ensuring long-term
sustainability. Read more about theBoard’s activities
this year and how the directors fulfil this s.172 duty in its
decision making on pages 53 to 54.
Alongside this s.172 statement, which includes examples of key outcomes in the Board’s decision making on page 9,
the table below highlights other sections of this report which explain how the directors have had regard to s.172 factors.
S.172 factor Further information can be found on
(a) The likely consequences of any decisions
in the long-term
Our Business Model: page 5
Strategic Progress: pages 10-14
Risk Management: pages 41-47
(b) Interests of employees Our Business Model: page 5
People and Culture: pages 25-26
Remuneration Committee Report: pages 66-68, 81-82
Non-Financial and Sustainability Information
Statement: page 40
(c) Fostering the company’s business relationships
withsuppliers, customers and others
Our Markets: page 4
Our Business Model: page 5
Strategic Progress: pages 10-14
Principal Risks and Uncertainties: pages 43-47
(d) Impact of operations on the community
andenvironment
Strategic Progress: pages 10-14
ESG Review: page 27
TCFD: pages 28-39
Principal Risks and Uncertainties: pages 46-47
ESG Committee Report: pages 58-59
ESG Report: corporate.marksandspencer.com/
ESGreport2026
(e) Maintaining a reputation for high standards
ofbusiness conduct
Our Business Model: page 5
TCFD: pages 28-39
Non-Financial and Sustainability Information
Statement: page 40
Risk Management: pages 41-42
Principal Risks and Uncertainties: pages 43-47
Audit & Risk Committee Report: pages 60-65
(f) Acting fairly between members of the company Our Business Model: page 5
Strategic Progress: pages 10-14
Remuneration Committee Report: pages 66-92
Cyber incident and recovery
The Board and senior leadership were mindful of the
cyberincident’s impact on all stakeholders, and ensured
engagement included timely updates on the impact,
business response, and progress on recovery.
Customers and communities: regular email
communications and social media updates were issued to
apologise for any inconvenience experienced during the
disruption, and to keep customers updated as systems
were recovered.
Colleagues: were supported with guidance on manual
ways of working and kept updated in email briefings and
regular huddles, including from the CEO.
Shareholders: were updated on the evolving situation,
impact and expected costs in market announcements.
Detailed answers to shareholder questions were also
provided at the 2025 AGM and Capital Markets Day.
Suppliers and partners: leadership teams were in close
collaboration with suppliers and partners to discuss and
mitigate the impact on stock ordering and flow in the
supply chain.
Marks and Spencer Group plc Annual Report and Financial Statements 20266
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
STAKEHOLDER ENGAGEMENT AND S.172 STATEMENT CONTINUED
Customers
We put customers at the heart of everything we do and
focus on what makes M&S special: delivering quality
andvalue.
How M&S engages
Closer to customers: Getting closer to customers is a core
feature of our Reshaping for Growth strategy, which we do
through regular focus and listening groups. During the
year these included:
•
Fashion, Home & Beauty (FH&B) Pulse surveys, reaching
a community of around 47,000 customers. These were
key during the cyber incident to understand the impact
on M&S shoppers. The FH&B leadership team used the
insights gathered to determine the next recovery priorities.
•
Quarterly listening panels, offering the opportunity for
Food customers to speak directly to our senior
leadership and Executive Committee (ExCo).
The Collective: This year, we shared c.80 surveys with the
Collective, our online community of around 43,000 Food
customers. We gathered feedback on a range of topics,
from category transformations and packaging redesign to
new product launches. These insights have supported our
Product Development teams to better understand M&S
customer needs, with feedback contributing to launches
like our Nutrient Dense range.
How the Board interacts
•
Regular feedback from mystery shoppers and our
customer contact centre.
•
Updates from the business on consumer trends and
response to M&S products and surveys.
•
Board papers on the store rotation pipeline, including
customer reactions to, and performance of, recent
storeopenings.
•
Store visits throughout the year to see the business in
action and get closer to customers and colleagues.
Colleagues
High-performance culture is a key driver of building the
M&S we need to be. Every colleague has a part to play in
bringing our M&S behaviours to life.
How M&S engages
Straight to Stuart: Since its inception, the Straight to
Stuart scheme has enabled colleagues to share ideas
directly with the CEO to improve how we work. Over 5,000
ideas were submitted this year, with more than 100 approved
and implemented. One idea was our gluten-free Made
Without Colin, which launched in January 2026 after more
than 25 suggestions from colleagues across the UK.
Live From The Floor: These weekly sessions strengthen
feedback between colleagues on the shop floor and senior
leadership, bringing together a small group of Store and
Regional Managers to discuss issues and opportunities.
Actions are shared with Stuart and ExCo, and resolutions
communicated back to stores in the next weekly session.
M&S Way: This year we relaunched the ‘M&S Way’, in-store
operational guidance to support our Simple for Stores
programme and establish a single, consistent approach
forcolleagues to deliver processes. Stores saw the benefits
ofour new ways of working over Christmas, when we delivered
some of our strongest operational and customer metrics
to date.
How the Board interacts
•
Feedback from the ‘Pulse’ survey is considered and
actions discussed with ExCo. More details on People and
Culture on pages 25 to 26 and the Board’s discussions
on page 53.
•
Board meeting attendance by the National Business
Involvement Group Chair to hear from our colleague
engagement network.
•
Monthly updates by the CEO and Chief People Officer,
covering the delivery of our high-performance culture
and our internal senior management talent pipeline.
Shareholders
Continuous engagement with both our institutional and
retail shareholders builds trust and helps to secure their
investment and support.
How M&S engages
Shareholder Panel: Our Shareholder Panel provides an
opportunity for retail shareholders to share their views on
the business and hear more from our leadership team. This
year, the Panel met three times and explored the topics of
product, our store estate and our use and adoption of AI.
Institutional shareholders: The Investor Relations team
engaged extensively with shareholders, meeting over 200
institutional funds representing around 50% of issued
share capital. Investors emphasised the need for long-term
growth and continued investment in store rotation, supply
chain and technology.
Post-AGM engagement: At our Annual General Meeting
(AGM) in July 2025, Resolution 27, which was requisitioned
by a small group of shareholders coordinated by ShareAction,
was not passed but received 30.70% support. Following the
AGM, we consulted widely with shareholders to understand
their views on the resolution. Through this engagement,
we heard that shareholders are increasingly interested in
our approach to people, and their support for the resolution
was primarily driven by an appetite for additional disclosures.
I
n response, we committed to enhancing our workforce-related
disclosures, to provide shareholders with greater insight
on our approach to colleagues and the extended M&S
family. Read the disclosures in our People and Culture
section on pages 25 to 26.
Capital Markets Day: Our November Capital Markets Day
provided investors with deeper insight into our
transformation, attracting 72 in-person attendees
andover 600 webcast views.
How the Board interacts
•
Formal and informal meetings with our top institutional
investors to hear feedback on our strategy and
performance, and key issues faced by our shareholders.
•
Attendance at our AGM and hearing direct from
shareholders in the Q&A portion of the meeting.
•
Consideration of all results announcements and
dividends throughout the year.
•
Updates on the shape of our share register to keep close
to analyst and investor feedback.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 7
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
STAKEHOLDER ENGAGEMENT AND S.172 STATEMENT CONTINUED
Communities
We need to make sure we have a positive impact on
thecommunities we serve, with over 34m customers,
64,000 colleagues and operations in 70 markets including
Europe, the Middle East, Asia, the US and Australia.
How M&S engages
M&S Archive: Our Archive, based in Leeds where our
business began, shares M&S heritage with customers,
communities and learners of all ages. This year, we
launched new workshops to support children and young
people with special educational needs and disabilities
(SEND). Developed in consultation with teachers and
schools, they have proved popular and boosted learners’
skills and confidence. We also added more resources to the
Digital Archive, enabling online access to material on the
development of food and textile technology, fashion
design and sustainability.
YoungMinds: Since the launch of our headline charity
partnership with YoungMinds in 2023, the UK’s leading
mental health charity for young people, we have surpassed
our fundraising goal of £5m over three years, raising £5.5m
in just two years. We have now set a new ambition – to raise
a further £1.5m which could help fund YoungMinds’
support for parents and carers for a whole year.
Neighbourly: Over our 10-year partnership with
Neighbourly, we have helped deliver more than 100m
meals to local causes, ensuring good food reaches the
communities who rely on it. To build on this, we have
strengthened store processes this year to maximise
redistribution and ensure each store is paired with at least
one local good cause. We have also extended our impact
further up the supply chain as part of the Alliance for Food
Sourcing initiative, working with industry to divert even
more surplus food to FareShare and the Felix Project.
How the Board interacts
•
Presentations from our Head of ESG and Head of
Communities to the ESG Committee on our strategy,
Plan A and long-term charity partnerships.
•
Approving the ESG Report, Modern Slavery Report and
TCFD Report annually upon recommendation from the
ESG Committee.
Suppliers
Our suppliers are key to making sure we deliver great
valueand high-quality products. Our long-term strategic
partnerships help deliver sustainable solutions and drive
greater innovation across the supply base.
How M&S engages
Regional supplier listening groups: The FH&B Managing
Director, Head of Region and Head of Sourcing travelled to
sourcing offices to hold a series of listening groups this
year. These sessions aimed to strengthen relationships
across our international supply base, creating open forums
for our long-standing partners to share feedback, highlight
opportunities, and shape how we work together. Actions
from the meetings will influence future ways of working
with suppliers.
Made Well workshops: In November 2025 we launched our
Made Well product workshops, inviting key suppliers to
London for a five-day learning week. These brought
suppliers and colleagues closer together to align on what
great looks like for M&S customers, with our technical team
walking suppliers through the product journey from
samples to shop floor.
Supplier voice framework: This year we continued to build
our supplier voice framework, giving opportunities for
local suppliers to engage with us directly. We held regular
one-to-one listening sessions, supplier dinners with
members of the ExCo, biannual supplier briefings and
shared quarterly newsletters. Following a recent request
for further support on joint business planning, we also ran
targeted webinars to help suppliers better understand our
internal processes.
How the Board interacts
•
Presentation from the FH&B Managing Director on
sourcing office visits and his reflections. Non-Executive
Directors also visited suppliers directly.
•
Maintaining oversight of our strategic partnership
programmes, including our ‘Fortress’ factories programme.
•
Regular updates on supply chain transformation in both
Food and Fashion, Home & Beauty.
Partners
Our franchise and joint venture partners play a critical role
in our strategy, bringing invaluable market expertise
andunlocking access to new customers in the UK
andinternationally.
How M&S engages
International partner Pulse survey: In February 2026 we
launched a ‘Pulse’ feedback survey for our International
partners. It provided insights about vision, shared goals,
business partnering, and communication, with partners
expressing their desire to grow and develop with M&S. In
response, we have created a new Fashion, Home & Beauty
Global Critical Path, setting out a focused, long-term plan
for how we will drive growth together.
Store partner conferences: Following their popularity last
year, we hosted various conferences this year, including:
•
Three online panels, enabling franchise stores to dial
inand hear from members of the Food business. These
sessions explored upcoming product launches and
trading plans, ensuring stores understand their part in
delivering the M&S experience. Partners were also able
to share feedback and ask questions, which shaped
future sessions.
•
Food partner conferences in June and October, with
partners invited to our Waterside House Support Centre
for face-to-face discussions on business strategy and
upcoming seasonal campaigns.
Convenience Way immersion event: After a successful
launch of the M&S Way in wholly-owned stores, we
launched the ‘Convenience Way’ for our franchise partners.
The launch began with all Store Managers from partner
stores invited to an immersion event, engaging them on
how process and efficiency can drive sales.
How the Board interacts
•
Regular board papers on our UK and international
partnership programmes. During the year, these
included updates on new partnerships with Coles,
Targetand Nordstrom.
•
Consideration of all long-term, strategic partnership
contracts for approval.
Marks and Spencer Group plc Annual Report and Financial Statements 20268
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Acquisition of Homebase stores
The Board approved the acquisition of 12 former
Homebase sites as part of the ongoing store
rotation programme, ensuring we have the right
stores in the right places with the right space.
These larger-format Food stores support our
ambition to grow the Food business and provide
the capacity we need to modernise the M&S store
experience for customers. In assessing the
proposal, the Board considered a range of
stakeholder needs:
•
Customers increasingly want access to the full
M&S Food range in spacious, modern stores.
Larger sites with improved layouts, bakeries,
market style produce and Click & Collect will
enhance the offer and support strong
salesmomentum.
•
Colleagues will benefit from high-quality
working environments and new roles created
through the 550 jobs expected across
thesites.
•
Investors should see returns on their investment
in the medium term, as trading fromnew and
renewed stores has outperformed plan for
three consecutive years.
•
Communities will gain local employment and
more energy efficient stores aligned with our
Plan A commitments.
Weighing these considerations, the Board
concluded that acquiring these strategically
located sites will accelerate growth, improve
customer experience, and deliver sustained
value for all stakeholders.
‘Fortress’ factories
In June 2024, the Board approved the Food
team’s plans to build a more sustainable and
resilient UK food manufacturing base. ‘Fortress’
factories have been a critical component of the
strategy to support long-term growth by
strengthening supplier capability and securing
the capacity needed to expand the Food business.
In evaluating numerous contracts brought for
approval during the year, the Board considered
the needs of key stakeholders:
•
Customers can expect quality, innovation and
consistent availability. Modernised, well-invested
suppliers are essential to maintaining M&S’
unique product standards and differentiation.
•
Suppliers face challenges from their own
ageing infrastructure and manual processes,
limiting their ability to meet future demand.
Long-term contracts and partnership
commitments provide the confidence suppliers
need to invest in new technology
andexpanded capacity.
•
Investors can be assured this model will
deliver long-term value. The fortress factory
approach protects unique selling points,
secures capability and reduces supply
chainrisk.
•
Communities benefit from stable employment
and continued investment in UK manufacturing.
During the year, the Board approved three fortress
factory contracts, for poultry, floral and gifting,
concluding that deep, long-term partnerships
areessential to unlocking sustainable growth
andsecuring the future resilience of the Food
supply chain.
Food distribution network
investment
The Board approved a £340m multi-year
investment in a new automated National
Distribution Centre (NDC) in Northamptonshire.
This is a strategically critical step towards achieving
our ambition to double the size of ourFood
business. The NDC will provide the capacity,
efficiency and resilience we need to support store
rotation and renewal, improve product availability,
and lower long-term cost to serve. As part of its
deliberations, the Board considered several
conflicting stakeholder interests:
•
Customers will benefit from better availability
and value, which automation supports through
improved accuracy and lower operating costs.
•
Colleagues requested greater detail about
automation; however, the investment will
create 1,000 permanent roles, including new
technical opportunities. The NDC will provide a
modern, high-standard working environment.
•
Investors seek capital discipline and strong
payback on investment. Detailed modelling
demonstrated long-term returns and alignment
with our strategic priorities.
•
Suppliers and partners will benefit from an
enhanced and modernised logistics network.
•
Communities and the environment will benefit
from sustainable technologies helping to
deliver our net zero ambitions, while the NDC
also provides regional economic investment.
Having considered these wide-ranging interests,
the Board concluded the investment was essential
for M&S’ long-term growth, competitiveness, and
delivery of the Food strategy, providing
enduring value for all stakeholders.
STAKEHOLDER ENGAGEMENT AND S.172 STATEMENT CONTINUED
Our Board thoughtfully considers the varied priorities of each stakeholder, working to promote and protect M&S’ long-term
success and reputation. Examples of these considerations and outcomes in the Board’s decision making are set out below.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 9
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Our
Transformation
At the October 2022 Capital
Markets Day, we set out the
strategy of reshaping M&S. Our
objectives included growing
market share in both UK
businesses by 1% by 2027/28 and
targeting operating margins of
over 4% inFood and 10% in
Fashion, Home & Beauty.
Supported by structural cost
reductions of over £600m and
disciplined capital allocation.
STRATEGIC PROGRESS
Our strategic progress
Create
exceptional
products
Drive
profitable
salesgrowth
Deliver
target
operating
margins
Build the M&S we need to be
A year of two halves
Performance in 2025/26 was a year of
two halves: significant operational
impact from the cyber incident during
the first, followed by a return to sales
and profit growth in the second.
Despitethe disruption, M&S made
furtherprogress on its transformation,
enabled by a strong balance sheet and
sustained net funds position.
In 2025/26, M&S Group adjusted profit
before tax was £671.4m down from
£881.1m. Second half adjusted profit
increased 4.1% year-on-year, as growth in
Food more than offset the decline
inFashion, Home & Beauty.
Food sales grew 7.0% as customer
numbers increased and market share
grew 17bps to 4.1%. Food invested in
trusted value, increased quality and
made regular new product launches.
Adjusted operating profit was £444.5m
down from £491.8m in the prior year,
reflecting sustained volume growth in
H2 following the impact of increased
markdown and waste in H1.
Fashion, Home & Beauty sales declined
7.7%, reflecting the temporary pause in
online trading and systems access, which
disrupted stock flow and restricted
availability. Despite these operational
challenges, customer perceptions of
style saw an encouraging improvement.
Adjusted operating profit was £213.4m
down from £478.0m in the prior year,
reflecting the markdown and clearance
of excess seasonal stock related to the
incident, principally in H2.
International reported sales declined
7.2% with an improving performance
inH2, partly offset by shipment delays
tothe Middle East in the final month
ofthe financial year. Adjusted operating
profit increased to £39.1m from £35.9m in
the prior year driven by reduced costs, as
International began to reset franchise
agreements and built new wholesale and
online marketplace partnerships.
During the incident, teams operated
withpace and accountability, prioritising
customers, recovering the business and
maintaining delivery of the transformation.
Reinvesting for growth
M&S enters 2026/27 with increased focus
on its three core investment programmes
of supply chain modernisation, technology
transformation and store rotation. As
outlined at last year’s Capital Markets
Event, the year ahead sees a step-up in
investment for growth, and in cost
savings ambition.
A pipeline of new, high-volume store
openings has been developed. Supply
chain capacity is being increased with
investment focused on enabling volume
growth and reducing cost to serve.
Near-term online improvements are
focused on search, imagery, check-out
and payments.
Digital and technology investment in
thefashion planning platform, food
warehouse management systems and
e-commerce platform improvements
restarted in the second half. The next
phase prioritises simplification of the
technology estate and driving online
growth. AI is being used selectively
where it reduces cost or improves
decisions including pricing, waste reduction
and personalised customer offers.
Sparks has been relaunched, focusing
onwallet-based customer rewards,
laying the groundwork for greater
personalisation and engagement.
Structural cost reduction of £600m is
targeted between 2022/23 and 2027/28.
Initiatives are expected to deliver
increased in year savings, helping to
offset frontline colleague pay inflation
and government tax levies.
The strategy supports medium-term
growth in revenue, earnings per share
and free cash flow and capital allocation
priorities reflect this. This year M&S
capital expenditure will increase to
c.£650m-£750m, with approximately
two-thirds targeting the long-term
growth opportunity in Food.
Outlook
M&S enters 2026/27 with a clear plan and
a strong balance sheet, focused on
delivering further improvements to
availability and service levels. Profit
growth is expected to resume versus
2024/25.
Food continues to drive volume growth
through reinvestment in value, quality
and innovation and increased new store
openings. Fashion, Home & Beauty’s
priority is delivering growth on the back
of stronger style credentials and new
supply chain capabilities.
The outlook for the current year includes
higher fuel, freight and input costs and
continued government tax levies and
regulatory headwinds for the sector.
These are being mitigated through
improved buying, reinvestment in value
to drive volume, and savings from the
structural cost reduction programme.
Further progress on the transformation
is anticipated in the year ahead, as M&S
reinvests for growth.
Marks and Spencer Group plc Annual Report and Financial Statements 202610
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
STRATEGIC PROGRESS CONTINUED
Doubling Food by driving
volume and investing in
stores, technology and
supply chain capacity
Food sales increased 7.0% to £9.7bn with like-for-like
sales growth of 6.7%. Adjusted operating profit
declined by 9.6% to £444.5m as additional
markdown and waste impacted the first half.
Thiswas partly offset in the second half
following a strong operational Christmas and
sustained growth in the final quarter. M&S UK
volume grew 3.3% in a broadly flat market, with
over 800,000 additional shoppers in the year.
See our key stories online at:
corporate.marksandspencer.com
Food
Strategic KPIs:
Market share
increasedto
4.1%
24/25: 3.9%
Perception
for value
5.2
24/25: 6
Perception
for quality
69.4
24/25: 71
Further commercial progress
Product improved further, with upgrades to quality
broadening customer appeal. Highlights included
growth in core categories including poultry, produce
and bakery.
•
Value investment included ‘Dropped & Locked’ and
‘Remarksable’ pricing focused on core categories
such as protein and produce, with a strong volume
response to price reductions.
•
Quality was upgraded in more than 1,000 products
including Italian and Indian meals and flowers, as
suppliers invested in new technology and facilities at
M&S dedicated sites under long-term ‘Fortress
Factory’ agreements.
•
Over 1,400 new lines were launched during the year,
driving customer engagement. This included the
‘only…ingredients’ and ‘nutrient dense’ ranges,
strengthening M&S’ health credentials.
M&S takes a long term approach to supplier relationships,
with contractual commitments that secure supply and
support British farming. This includes new decade-long
agreements for British lamb and beef signed during
theyear.
New larger Food stores driving growth
The long-term ambition is to double Food sales supported
by investment in new stores, with a plan for 380 Food
stores by 2027/28. 12 new Food stores opened,
including three conversions of former Homebase
stores, and three new full line stores. These larger
format stores have performed ahead of expectations.
The table below illustrates the sales and estimated cash
contribution during the first 12 months of trading
relating to five Food stores which opened in 2024/25.
New Store Performance Investment Metrics
Sales
Cash
contribution
Capex
spend
Anticipated
payback
£90.0m £8.9m £17.6m 3.3 years
In the year ahead 18 new openings and three extensions
are planned, bringing the full M&S range to more customers.
Investing in modern supply chain
capacity for long-term growth
M&S Food volumes have grown strongly over the past
five years reducing spare capacity and creating the
need for temporary warehousing and causing deliveries
from more distant depots, putting upward pressure
oncosts.
The acquisition of Gist in 2022 has delivered substantial
cost savings and an attractive return on capital, equating
to a three-year payback. Investment is increasing
capacity and automation to consolidate the network
and to support volume growth into the 2030s. There
will be temporary costs in the short term, but as
investments are delivered, cost per case will reduce.
In 2026/27, investment focuses on a regional distribution
centre in Avonmouth and in the previously announced
national distribution centre in Daventry. While construction
is completed, additional temporary space will be leased.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 11
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
STRATEGIC PROGRESS CONTINUED
Reshaping the business,
supply chain and systems
Sales declined by 7.7% to £3.9bn, with adjusted
operating profit down 55.4% to £213.4m and an
adjusted operating margin of 5.5%. Sales grew
0.2% in the second half, reflecting the restoration
of online trading although performance remained
constrained by the long tail impact of the incident
on availability and the clearance of excess seasonal
stock in the Sale. The effect on availability is now
tapering, and new ranges are resonating well
with customers.
Fashion, Home & Beauty
Strategic KPIs:
Market
share
10.2%
24/25: 10.5%
Perception
for value
43
24/25: 43
Perception
for style
37
24/25: 33
Recognition of M&S quality,
valueandstyle
While the incident resulted in reduced sales and market
share, further progress was made on product appeal
with growing customer numbers in the second half and
improved perceptions for style in the year.
•
Womenswear saw the greatest impact from the
incident but continued to make progress creating a
more edited range in store with 9% of options
removed for Spring/Summer.
•
Menswear grew sales of denim and casual tops
contributing to strong retail market share.
•
Lingerie sold 1.8 million £10 bras and new sleepwear
ranges performed well.
•
Kidswear opening price points were reduced as the
business seeks to reposition its ranges.
Robust new store performance
despiteonline constraints
Fashion, Home & Beauty’s ambition is to double online
sales, improve profitability and increase online
participation to 50%. Alongside this it aims to generate
sustainable store sales through a profitable, focused
group of 200 full-line stores by 2027/28.
Online returned to modest growth in the second half.
Near term focus is on improving shopping experience in
areas such as search, imagery, check out and payments.
In parallel, e-commerce platform modernisation will
enable faster change. Product-focused marketing has
increased, and Sparks has been relaunched, with the
aim of improved personalisation and enabling
customers to spend their rewards across M&S from
anew wallet-based offer.
A new full-line store was opened in Bristol Cabot Circus,
Bath was relocated and Doncaster Wheatley was extended.
These stores have traded ahead ofexpectations.
The table below illustrates the sales and estimated cash
contribution during the first 12 months of trading
relating to full-line stores which opened in 2024/25.
New Store Performance Investment Metrics
Sales
Cash
contribution
Capex
spend
Anticipated
payback
£158.5m £34.0m £38.6m 2.9 years
Rewiring the end-to-end supply chain
and investing in capacity for growth
With improving product appeal, the priority now is to
tackle legacy supply chain constraints across
commercial planning, logistics, sourcing and online and
the pace of change is increasing.
•
Supply chain capacity is expanding to reduce split
shipments, improve customer service and lower costs.
The recently announced investment in a 437,000 sq.
ft. automated distribution centre in Lichfield will
accelerate the expansion of online capacity earlier
and at a lower capital cost than originally planned,
while supporting network consolidation. It is
expected that the new facility will start fulfilling
customer orders in 2027, with a phased ramp-up
thereafter. Additional boxed storage at Bradford and
automated sortation capacity at Castle Donington
will be delivered this year.
•
Buying and merchandising teams are introducing
shorter lead times for seasonal products and trends,
while buying core lines year-round. This is enabled by
the roll out of the planning platform and further
sourcing consolidation.
•
Operational efficiency is improving, with store
friendly deliveries and additional returns capacity
being implemented which will reduce handling costs
and accelerate resale.
See our key stories online at:
corporate.marksandspencer.com
Marks and Spencer Group plc Annual Report and Financial Statements 202612
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Modest operatingprofit delivered
fortheyear
Ocado Retail combines M&S Food with Ocado Group’s automated fulfilment
tooffer differentiated online choice, service and customer experience. The
M&S objective is for it to be a sustainable self-funded business, enabled by
improved commercial performance.
STRATEGIC PROGRESS CONTINUED
Capital light growth
With M&S having strong UK brand recognition, there is long-term potential
tobuild a global brand presence through targeted capital light expansion.
In2025/26 International was impacted by a lagging recovery from the incident
followed by the effects of the Middle East war.
International Ocado Retail
Sales were down 7.2% (5.7% at constant currency) with an improving performance in
the second half. New business in wholesale and marketplaces partly offset declines
inowned and franchise, despite shipment delays to the Middle East in the final month
of the year.
Operating profit before adjusting items increased to £39.1m from £35.9m, driven
byreduced costs in owned markets
•
Franchise terms are being reset to enable investment in trusted value. Where lower
prices have been implemented there has been encouraging volume growth.
•
Online sales are starting to grow through marketplaces, with expanded ranges
onZalando in Europe. European customer fulfilment is transitioning to Zeos,
whichoffers the prospect of improved service, availability and reduced costs.
•
Wholesale is growing selectively from a small base through new agreements with
retailers such as Coles in Australia for Food and Nordstrom in the US forFashion.
In the year ahead the International result may be constrained by the disruption to
deliveries to Middle East partners, where annual sales were approximately c.£100m
in2025/26.
Results for the current period relate to the 51-weeks ended 29 March 2026 and reflect
revenue of £3.2bn and an adjusted operating profit of £15.2m. The joint venture was
accounted for via the equity method in the prior period. M&S products drove sales
onOcado.com and were up 17.7% to more than £1bn during the year. Combined
withincreased customer fulfilment centre (CFC) efficiency this resulted inan
improvedperformance.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 13
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
M&S has the capacity to deliver attractive compound growth in earnings per
share and free cash flow. From a starting point of improved commercial
performance and a strong balance sheet, capital allocation reflects this.
STRATEGIC PROGRESS CONTINUED
In 2026/27, M&S capital expenditure net of disposals will be c.£650-£750m in line with
previous forecasts, with approximately £150m on maintenance investment and the
balance on growth and cost out spend. Approximately two-thirds of this is allocated
to Food, which has been the fastest growing and highest returning business, and the
balance will go to Fashion, Home & Beauty.
Anticipated 2026/27 capital expenditure:
2026/27 £m
Total maintenance £150m
Property £200m
Supply chain £200m
Digital & Technology £140m
Other £20m
Total growth & cost out £560m
M&S capital expenditure £710m
Property disposals (£40m)
Lichfield investment £70m
M&S capital expenditure £740m
•
Property investment includes 18 new Food stores, four extensions and two full-line
stores alongside additional renewals.
•
Supply chain is weighted to Food reflecting the previously announced construction
and automation of the Avonmouth regional distribution centre and the fit out of
Daventry national distribution centre. Fashion, Home & Beauty capex reflects the
integration of the recently acquired Lichfield warehouse.
•
Digital & Technology is weighted towards Fashion, Home & Beauty reflecting the
planning platform roll out, online experience improvements and retail
productivityinitiatives.
A strong balance sheet remains a priority. Increased free cash flow from operations
isplanned in the year ahead, supported by reduced working capital.
Dividends remain conservative, reflecting the current investment phase. The Board
isproposing a final dividend of 3.0p per share, taking the full year dividend to 4.2p
per share, an increase of 16.7% on last year.
Disciplined capital allocation and investment
Marks and Spencer Group plc Annual Report and Financial Statements 202614
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Group sales
£17.4bn* £14.2bn
Including Ocado Excluding Ocado
24/25: +24.8% 24/25: +1.9%
OUR KEY PERFORMANCE INDICATORS
14.2
13.9
13.1
25/26
24/25
23/24
22/23 12.0
Adjusted return on capital
employed (adjusted ROCE)
12.7%
24/25:-3.7% pts
12.7
16.4
14.1
10.6
APMAPM
25/26
24/25
23/24
22/23
M&S Group adjusted profit
before tax
£671.4m
24/25: -23.8%
APM
Statutory profit before tax
£364.6m
24/25: -28.8%
25/26 364.6
24/25 511.8
23/24 672.5
22/23 475.7
Adjusted basic earnings
per share (EPS)
23.8
p
24/25: -25.4%
APM
25/26 23.8
24/25 31.9
23/24 24.6
22/23 16.9
Basic earnings per share
12.7
p
24/25: -13.0%
25/26 12.7
24/25 14.6
23/24 21.9
22/23 18.5
Dividend per share declared in
respect of the year
4.2
p
24/25: +16.7%
25/26 4.2
24/25 3.6
23/24 3.0
22/23 0.0
Free cash flow from
operations
£131.3m
24/25: -70.4%
APM
131.3
443.3
437.8
25/26
24/25
23/24
22/23 181.9
Group sales were £17.4bn, an
increase of 24.8% versus 2024/25,
excluding Ocado Retail, Group
sales grew 1.9% versus 2024/25.
Adjusted return on capital
employed decreased to 12.7%
from 16.4% in 2024/25.
Group adjusted profit before tax
was £671.4m, down from £881.1m
in 2024/25.
The Group generated a statutory
profit before tax of £364.6m,
compared with a profit of £511.8m
in the prior year.
Adjusted basic EPS was 23.8p,
down 25.4% on 2024/25 reflecting
lower adjusted profit in the period.
Basic EPS was 12.7p, reflecting
reduced profit in the period.
A final dividend of 3.0p per share
has been declared, payable on
10July 2026. This results in a
full-year dividend of 4.2p per
share, an increase of 16.7%.
The business generated free cash
flow from operations of £131.3m,
adecrease from £443.3m in
2024/25.
25/26 671.4
24/25
23/24
22/23
881.1
716.4
453.3
* Includes consolidation of the results of ORL from Ocado Group to M&S which was effective from 6 April 2025.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 15
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
FINANCIAL REVIEW
28 Mar 26
£m
29 Mar 25
Restated
£m
1
Change vs
24/25
%
Group statutory revenue 17, 273.6 13,816.8 25.0%
Group sales 17, 371.5 13,914.3 24.8%
Group sales (excluding Ocado Retail) 14,178.1 13,914.3 1.9%
Food 9,719.3 9,085.7 7.0%
Fashion, Home & Beauty 3,915.5 4,243.4 (7.7%)
International 543.3 585.2 ( 7.2%)
Ocado Retail
2
3,193.4 — n/a
Operating profit before adjusting items 818.4 984.5 (16.9%)
Food 444.5 491.8 (9.6%)
Fashion, Home & Beauty 213.4 478.0 (55.4%)
International 39.1 35.9 8.9%
Insurance income 100.0 — n/a
Ocado Retail
2
15.2 — n/a
Share of result in associate
2
— (28.7) n/a
M&S Financial Services 6.2 7.5 (17.3% )
Net interest payable on lease liabilities (145.1) (110.2) 31.7%
Net financial interest (16.6) 1.2 n/a
M&S has the capacity to deliver attractive
compound growth in earnings per share and
free cash flow. From a starting point of improved
commercial performance and a strong balance
sheet, capital allocation reflects this.
Alison Dolan
Chief Financial Officer
28 Mar 26
£m
29 Mar 25
Restated
£m
1
Change vs
24/25
%
Profit before tax and adjusting items 656.7 875.5 (25.0%)
Adjusted non-controlling interests before tax 14.7 5.6 n/a
M&S Group adjusted profit before tax
3
671.4 881.1 (23.8%)
Profit before tax and adjusting items 656.7 875.5 (25.0%)
Adjusting items (292.1) (363.7) (19.7%)
Statutory profit before tax 364.6 511.8 (28.8%)
Taxation (128.4) (219.9) (41.6%)
Statutory profit after tax, attributed to: 236.2 291.9 (19.1%)
- Owners of the parent 259.4 295.7 (12.3%)
- Non-controlling interests (23.2) (3.8) n/a
Adjusted basic EPS 23.8p 31.9p (25.4%)
Basic EPS 12.7p 14.6p (13.0%)
Dividend per share 4.2p 3.6p 16.7%
Net debt
5
(2,411.8) (1,779.8) 35.5%
Net funds excluding lease liabilities 338.2 447.6 (24.4%)
Capital expenditure in cash flow (594.0) (458.6) 29.5%
Free cash flow from operations
4
131.3 443.3 (70.4%)
Adjusted return on capital employed
(12-month rolling) 12.7% 16.4% (3.7% pts)
1 Results of the Channel Islands have been reclassified from the International segment to be
reported within Food and Fashion, Home & Beauty.
2 Results for the period include the first-time consolidation of Ocado Retail Limited, with the prior
year including M&S’ group share of result in associate.
3 M&S Group adjusted profit before tax excludes the profit or loss attributable to shares we do not
own in subsidiary companies and adjusting items.
4 Surrender payments have been split out from cash lease payments and are now within free cash flow
but no longer within free cash flow from operations.
5 Net debt now includes the M&S Travel Money Revolving Credit Facility agreement with
Eurochange(£9.8m).
There are a number of non-GAAP measures and alternative profit measures (APMs) discussed within
this report, and a glossary and reconciliation to statutory measures is provided at the end of this
report. Adjusted results are consistent with how business performance is measured internally and
presented to aid comparability of performance. Refer to the adjusting items table on page 21 for further details.
Marks and Spencer Group plc Annual Report and Financial Statements 202616
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
FINANCIAL REVIEW CONTINUED
Group results
Statutory revenue in the period was £17,273.6m, an increase of 25.0% versus 2024/25,
driven by the consolidation of Ocado Retail Limited which generated sales of £3,193.4m
in the period. Group sales were £17,371.5m, an increase of 24.8% versus 2024/25,
excluding Ocado Retail, Group sales grew 1.9% versus 2024/25.
Food sales were up 7.0%, this was offset by a decline in Fashion, Home & Beauty sales
of 7.7% and International sales of 7.2%. Results of the Channel Islands have been
reclassified from the International segment to be reported within Food and Fashion,
Home & Beauty.
M&S Group adjusted profit before tax was £671.4m compared with £881.1m in the prior
year. This is reported following the deduction of non-controlling interests before
adjusting items and tax for Ocado Retail Limited and the group’s business in India in
the current year and Greece and India in the prior year.
Adjusting items were a net charge of £292.1m, compared with £363.7m in the prior year.
The net charge in the period includes £131.3m of costs directly related to the cyber
incident, which are further broken down in notes 1 and 5 to the financial statements.
As a result, the Group generated a statutory profit before tax of £364.6m, compared
with a profit of £511.8m in the prior year.
Adjusted basic EPS was 23.8p, down 25.4% on 2024/25 reflecting lower adjusted profit
in the period. Basic EPS was 12.7p, down 13.0% on 2024/25, reflecting reduced profit in
the period.
A final dividend of 3.0p per share has been declared, payable on 10 July 2026.
Thisresults in a full-year dividend of 4.2p per share, an increase of 16.7%.
Note, 2026/27 will be a 53-week year. M&S anticipates reporting 52-week comparable
results alongside the statutory outturn for 53 weeks to 3 April 2027.
For full details of the Group’s related policy and adjusting items, read more in notes 1
and 5 to the financial statements.
Food
Food sales increased 7.0% with UK volume growth of 3.3%, largely driven by increased
shopper numbers, supported by investment in value, quality upgrades, innovation
and new store openings.
Change vs 24/25 %
1
Q1 Q2 Q3 Q4 FY
Total sales 7.1 8.5 5.5 7.1 7.0
Like-for-like sales 7.2 8.3 4.9 6.8 6.7
Food statutory revenue 2,224.5 2,307.4 2,738.6 2,440.3 9,710.8
1 Sales growth includes direct sales to Ocado Retail of Food of £57.0m in the prior year which were
eliminated on consolidation in 2025/26.
Sales growth in the first half benefited from Easter timing, although overall growth
was impacted by the incident. In the second half, transactions were up 5.0% on last
year and baskets over £30 grew by 9.4%.
52 weeks ended
H1
£m
H2
£m
28 Mar 26
£m
29 Mar 25
Restated
£m
Change vs
2024/25
%
Sales 4,531.9 5,187.4 9,719.3 9,085.7 7.0%
Operating profit before
adjusting items 89.1 355.4 444.5 491.8 (9.6%)
Adjusted operating margin 2.0% 6.9% 4.6% 5.4% (0.8% pts)
Operating profit before adjusting items was £444.5m compared with £491.8m in 2024/25,
with an adjusted operating margin of 4.6% versus 5.4% last year. Profitability was
impacted by the incident in the first half but showed good progress in the second half.
Gross margin decreased by 1.3% pts, driven by increased markdown and waste and
the inclusion of £24.5m Extended Producer Responsibility (EPR) charges for the first
time during the first half. This was partly offset by a stronger profit performance
year-on-year in the second half.
Operating costs increased 4.9%, which was less than sales growth of 7.0%. Operating
costs in the period were driven by:
•
Retail costs, from increased colleague pay, National Insurance contributions (NI),
volume growth, and new store openings, partly offset by cost savings.
•
Logistics, from colleague pay, NI and volume growth, partly offset by cost savings.
•
Central costs reduced, reflecting lower incentive accruals and reduced
marketingspend.
Operating profit margin before adjusting items %
FY 2024/25 5.4
Gross margin (1.3)
Retail costs (0.2)
Logistics costs (0.1)
Digital & Technology 0.1
Central costs 0.7
FY 2025/26 4.6
Marks and Spencer Group plc Annual Report and Financial Statements 2026 17
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
FINANCIAL REVIEW CONTINUED
Fashion, Home & Beauty
Fashion, Home & Beauty sales decreased 7.7% driven by the incident impacts in H1,
followed by an improving trend in H2. Sales were constrained in both channels owing
to reduced availability following the incident.
Change vs 24/25 %
1
Q1 Q2 Q3 Q4 FY
Total sales (20.8) (12.3) (2.6) 4.3 (7.7)
Like-for-like sales (20.2) (12.1) (2.7) 4.3 (7.5)
Store sales (3.5) (3.2) (4.4) 3.3 (2.3)
Online sales (58.5) (29.7) 1.0 6.1 (18.4)
Fashion, Home & Beauty
statutory revenue 762.8 904.6 1,239.7 919.0 3,826.1
1 Sales growth includes direct sales to Ocado Retail of £5.2m in Fashion, Home & Beauty in the prior
year which were eliminated on consolidation in 2025/26.
Store sales decreased by 2.3% to £2,749.8m, returning to growth in the final quarter.
Online sales decreased by 18.4% to £1,165.7m, reflecting the pause in online orders
followed by a gradual recovery over the summer. During the second half website
traffic and transactions increased versus last year.
52 weeks ended
H1
£m
H2
£m
28 Mar 26
£m
29 Mar 25
Restated
£m
Change vs
2024/25
%
Sales 1,697.6 2,217.9 3,915.5 4,243.4 (7.7%)
Operating profit before
adjusting items 46.1 167.3 213.4 478.0 (55.4%)
Adjusted operating
margin 2.7% 7.5% 5.5% 11.3% (5.8% pts)
Operating profit before adjusting items was £213.4m compared with £478.0m in
2024/25, with an adjusted operating margin of 5.5% compared with 11.3% last year.
Gross margin decreased by 2.7% pts driven by increased stock management and
markdown related costs, which were weighted towards H2.
Operating costs decreased 1.5% compared with a sales decline of 7.7%. This resulted in
higher operating costs as a percent of sales. Operating costs were driven by:
•
Retail costs, from higher colleague pay, NI and maintenance, which were partly
offset by cost savings.
•
Logistics costs were down year-on-year, reflecting lower volumes, the exit of bulky
furniture and cost savings which more than offset the incident-related warehouse costs.
•
Digital & Technology, from systems development including planning platform and
re-launch of Sparks.
•
Central costs reduced, largely due to lower incentive accruals, partly offset by
increased performance marketing spend.
Operating profit margin before adjusting items %
FY 2024/25 11.3
Gross margin (2.7)
Retail costs (2.1)
Logistics costs (0.7)
Digital & Technology (0.7)
Central costs 0.4
FY 2025/26 5.5
Within these results, store margin was 10.0% and online margin was (5.2%).
International
International sales decreased by 7.2% (down 5.7% at constant currency), with an improving
trend in the second half. Sales declined due to lower franchise shipments, a pause to
online trading in H1, and selected store closures. This was partially offset by growth in
wholesale, supported by the launch of three new partnerships, and in marketplaces.
Operating profit before adjusting items increased 8.9% year-on-year driven by cost
management, including reduced marketing spend and store closures, which more
than offset the impact of the decline in franchise and online sales.
52 weeks ended
28 Mar 26
£m
29 Mar 25
Restated
1
£m
Change vs
2024/25
%
Change vs
2024/25
CC
2
%
Sales, split: 543.3 585.2 ( 7.2%) (5.7%)
Franchise
3
244.4 271.5 (10.0%)
Owned
3
228.8 251.6 (9.1%)
Online & Marketplaces 44.6 50.0 (10.8%)
Wholesale 25.5 12.1 110.7%
Operating profit before adjusting
items 39.1 35.9 8.9% 8.5%
Adjusted operating margin 7.2% 6.1% 1.1% pts 0.9 pts
1 Sales and profit in prior year restated to reflect change in reporting of Channel Islands to Food and
Fashion, Home & Beauty.
2 Constant currency.
3 Online sales for franchise and owned business are included within their respective channels.
Marks and Spencer Group plc Annual Report and Financial Statements 202618
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
FINANCIAL REVIEW CONTINUED
Ocado Retail
Ocado Retail (ORL) is a joint venture, 50% owned by M&S and 50% by Ocado Group.
The change of consolidation of the results of ORL from Ocado Group to M&S, was
effective from 6 April 2025. Results for the current period therefore relate to the
51-weeks ended 29 March 2026, whereas the joint venture was accounted for via the
equity method in the prior period. To aid understanding, operational metrics and
results for the current and prior period are therefore also presented for the 52-weeks
and comparable period below.
Sales for the 52-weeks increased 15.0%, driven by 12.0% growth in average orders per
week. This was driven by more effective customer acquisition and retention, and
increased frequency of shop. Average selling price increased by 2.2% as the business
remained focused on value for customers, inflating behind the market.
Key performance indicators
Ocado.com
1
(52 weeks ended)
29 Mar 26
£m
30 Mar 25
£m
Change vs
2024/25
%
Active customer base (000s) 1,302 1,177 10.6%
Average orders per week (000s) 521 465 12.0%
Average basket value (£) 124.64 122.35 1.9%
Average selling price (£) 2.83 2.77 2.2%
Average basket size (eaches) 44.01 44.22 (0.5%)
1 Ocado.com represents the Ocado.com business unit and excludes Ocado Zoom figures.
£m
52 weeks
ended
29 Mar 26
52 weeks
ended
30 Mar 25
Change vs
2024/25
£m
51 weeks
ended
29 Mar 26
Sales
2
3,252.2 2,827.0 425.2 3,193.4
Operating profit before adjusting
items 14.7 (20.4) 35.1 15.2
Adjusted operating profit margin 0.5% (0.7%) 1.2% pts 0.5%
1 Ocado Retail trading week runs Monday to Sunday (versus M&S trading week Sunday to Saturday).
2 Sales represents the Ocado Retail reported Revenue.
Operating profit before adjusting items was £14.7m compared with a loss of £20.4m in
2024/25.
Gross margin was broadly flat as Ocado Retail continues to limit the pass through of
cost inflation to customers.
Operating costs increased 10.7%, which was less than sales growth of 15.0%.
Operating costs in the period were driven by:
•
Fulfilment and delivery costs, which benefited from improved CFC efficiency and
productivity, partly offset by higher delivery costs.
•
Support costs increased driven by platform migration.
•
Fees payable to Ocado Group reduced as a percent of sales.
Operating profit before adjusting items %
FY 2024/25 (0.7)
Gross margin (0.1)
Fulfilment & Delivery 0.4
Marketing —
Support 0.4
Fees 0.7
Depreciation (0.2)
FY 2025/26 0.5
M&S Financial Services
M&S Financial Services generated a profit before adjusting items of £6.2m, compared
with £7.5m in the prior year. Profits were down on last year reflecting the impact of
the incident on the travel money business, alongside investment to integrate the M&S
credit card into the new Sparks loyalty app.
Details of the Financial Services transformation and insurance mis-selling provisions
can be found in adjusting items.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 19
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
FINANCIAL REVIEW CONTINUED
Net finance cost
52 weeks ended
28 Mar 26
£m
29 Mar 25
£m
Change vs
2024/25
£m
Interest payable
1
(34.5) (41.3) 6.8
Bank and other interest receivable 39.3 54.9 (15.6)
Net interest receivable 4.8 13.6 (8.8)
Unwind of discount on Scottish Limited
Partnership liability — (1.4) 1.4
Unwind of discount on provisions (9.2) (6.4) (2.8)
Net financial interest
1
(4.4) 5.8 (10.2)
Net interest payable on lease liabilities
2
(145.1) (110.2) (34.9)
Other finance costs
1
(12.2) (4.6) (7.6)
Net finance cost before adjusting items (161.7) (109.0) (52.7)
Net finance costs in adjusting items (10.4) (3.5) (6.9)
Net finance costs (172.1) (112.5) (59.6)
1 In the prior period Interest payable included £4.6m of other finance costs which has now been split
out in the table above.
2 Ocado Retail lease liabilities were included in Group consolidation from 6 April 2025 as M&S’s share
rights give accounting control from this date. The opening balance on consolidation was £333.8m
with the increase to £481.7m at year end primarily being due to a new lease liability in Erith of
approximately £140m.
Net finance cost before adjusting items increased from £109.0m to £161.7m. This was
driven by the effects of the consolidation of Ocado Retail which resulted in increased
interest payable on lease liabilities and increased other finance costs, reflecting
interest payable to Ocado Group on shareholder loans. Interest receivable decreased
driven by lower effective interest rates versus last year.
Adjusting items within net finance costs increased primarily due to the movement of
the IAS 19 pension surplus to a deficit position at the prior year end.
M&S Group adjusted profit before tax
M&S Group adjusted profit before tax was £671.4m, down 23.8% on 2024/25. The profit
decrease was primarily due to the decline in Food, and Fashion, Home & Beauty profit
due to the trading impact of the incident, partly offset by insurance income received
in the first half.
Profit before tax
Profit before tax was £364.6m (2024/25: £511.8m). This includes a net charge for
adjusting items of £292.1m (2024/25: charge of £363.7m).
Adjusting items
The Group makes certain adjustments to statutory profit measures to derive
alternative performance measures (APMs) that provide stakeholders with additional
helpful information and aid comparability of the performance of the business. For
further detail on these (charges)/gains and the Group’s policy for adjusting items,
please see notes 1 and 5 to the financial statements. These (charges)/gains are
reported as adjusting items on the basis that they are significant in quantum in
current or future years and aid comparability from one period to the next.
Marks and Spencer Group plc Annual Report and Financial Statements 202620
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
FINANCIAL REVIEW CONTINUED
Adjusting items continued
52 weeks ended
28 Mar 26
£m
29 Mar 25
£m
Change vs
2024/25
£m
Costs associated with the cyber incident (131.3) — (131.3)
Strategic programmes
Store estate (84.1) (84.4) 0.3
Digital and technology transformation (4.1) (10.2) 6.1
International reset 10.6 (20.6) 31.2
Furniture simplification — 11.1 (11.1)
Other
Store impairments, impairment reversals and
other property charges — 2.3 (2.3)
M&S Bank transformation and insurance
mis-selling provisions (32.4) (15.5) (16.9)
Legal settlement — 20.5 (20.5)
Amortisation and fair value adjustments relating
to Ocado Retail Limited (26.0) — (26.0)
Ocado Retail Limited – UK network capacity review (2.8) — (2.8)
Impairment of investment in Ocado Retail Limited — (248.5) 248.5
Included in share of results of Ocado Retail
Limited prior to consolidation — (14.9) 14.9
Included in operating profit (270.1) (360.2) 90.1
Net pension finance (costs)/income (5.0) 4.1 (9.1)
Net finance costs incurred in relation to Gist
Limited deferred and contingent consideration (3.8) (7.6) 3.8
Net finance costs relating to amortisation and
fair value adjustments of Ocado Retail Limited (0.9) — (0.9)
M&S Bank transformation and insurance
mis-selling provisions (0.7) — (0.7)
Included in net finance costs (10.4) (3.5) (6.9)
M&S Group Adjusting items (280.5) (363.7) 83.2
Non-controlling interest adjusting items
1
(11.6) — (11.6)
Adjustments to profit before tax (292.1) (363.7) 71.6
1 Relates to 50% non-controlling interest share of fair value adjustments acquired on consolidation of
Ocado Retail Limited (£12.1m) and 49% non-controlling interest share of India store closures £0.5m.
Adjusting items include direct cyber incident related costs as well as the costs
relating to several strategic programmes and other items. There was a net charge of
£292.1m, down from £363.7m in the prior year. This includes:
•
A charge of £131.3m in relation to the incident. £109.3m of these costs are related to
immediate incident systems response and recovery. Remaining charges incurred
relate to third party corporate costs predominantly for specialist legal and
professional services support.
•
A charge of £84.1m in relation to store estate rotation plans. The charge primarily
reflects the latest view of store closure plans and latest assumptions for estimated
store closure costs, as well as charges relating to the impairment of buildings and
fixtures and fittings, and depreciation as a result of shortening the useful economic
life of stores based on the most recent approved exit routes.
•
A credit of £10.6m in relation to the International reset. This largely reflects the
release of a provision for an onerous lease for a distribution centre in Europe. The
provision is no longer required, as a new contract has been agreed for the site.
•
A net charge of £33.1m in relation to M&S Financial Services transformation and
insurance mis-selling provisions. The higher charge this period is largely due to the
exclusivity buy out of General Insurance from HSBC.
•
A net charge of £26.9m in relation to amortisation and fair value adjustments
relating to the investment in Ocado Retail Limited. This included a one-off fair value
adjustment arising on consolidation of £17.7m. In addition, amortisation of fair value
adjustments on acquired intangibles and assets resulted in a charge of £9.2m, with
the portion relating to the non-controlling interest recognised separately.
•
Net finance costs of £10.4m, largely consisting of £3.8m relating to Gist acquisition
discount unwind, and £5.0m of net pension finance charge.
For further details on adjusting items see note 5 to the financial statements.
Taxation
The effective tax rate on profit before tax and adjusting items was 27.5% (2024/25:
26.7%). This is above the UK statutory rate, primarily due to the impact of non-deductible
Ocado Retail losses.
The effective tax rate on statutory profit before tax was 35.2% (2024/25: 43.0%). This is
higher than the effective tax rate on profit before adjusting items, primarily due to
the non-deductible nature of adjusting items such as impairments.
Total taxation charge for the period was £128.4m.
Prior year deferred tax liabilities have been restated owing to the recalculation of the
Group’s deferred tax calculation in relation to historical charges for IFRS 16 leases. In
line with IAS 8, the Group has restated balances as at 29 March 2025 and 30 March 2024,
the impact on the financial results as at 29 March 2025 was a £119.5m increase in
deferred tax liabilities. There is no impact on the cash flows, reported pre or post tax
profits or tax paid in any of the previous years.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 21
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
FINANCIAL REVIEW CONTINUED
Earnings per share
Basic earnings per share was 12.7p (2024/25: 14.6p), due to lower profit in the period.
Adjusted basic earnings per share was 23.8p (2024/25: 31.9p) due to lower adjusted
profit and an increased effective tax rate on profit before adjusting items.
The weighted average number of ordinary shares in issue during the period was
2,041.4m (2024/25: 2,021.9m), with the weighted average number of diluted ordinary
shares 2,115.3m (2024/25: 2,110.7m).
Cash flow
28 Mar 26
£m
29 Mar 25
Restated
£m
Change vs
2024/25
£m
Operating profit 536.7 624.3 (87.6)
Adjusting items within operating profit 281.7 360.2 (78.5)
Operating profit before adjusting items 818.4 984.5 (166.1)
Depreciation, amortisation, impairments and
disposals 650.7 542.6 108.1
Cash lease payments
1
(430.0) (343.0) (87.0)
Working capital (153.7) (38.6) (115.1)
Defined benefit scheme pension (39.8) 5.2 (45.0)
Capex and disposals (594.0) (458.6) (135.4)
Financial interest (11.8) (2.6) (9.2)
Taxation (7.1) (208.3) 201.2
Employee-related share transactions 29.7 (13.1) 42.8
Share of result from Associate — 28.7 (28.7)
Share of results in other joint ventures (0.4) (0.5) 0.1
Adjusting items in cash flow (130.7) (53.0) (77.7)
Free cash flow from operations 131.3 443.3 (312.0)
Surrender payments (23.5) (19.0) (4.5)
Transactions with non-controlling interest (0.2) (2.6) 2.4
Acquisitions, investments, and divestments (115.7) (2.1) (113.6)
Free cash flow (8.1) 419.6 (427.7)
Dividends paid (77.0) (60.5) (16.5)
Free cash flow after shareholder returns (85.1) 359.1 (444.2)
28 Mar 26
£m
29 Mar 25
Restated
£m
Change vs
2024/25
£m
Opening net funds excluding lease liabilities
2
447.6 45.7 401.9
Free cash flow after shareholder returns (85.1) 359.1 (444.2)
Net debt relating to consolidation of Ocado Retail (21.8) — (21.8)
Exchange and other non-cash movements excl.
leases (2.5) 42.8 (45.3)
Closing net funds excluding lease liabilities 338.2 447.6 (109.4)
Opening net debt including lease
commitments
2
(1,779.8) (2,165.8) 386.0
Free cash flow after shareholder returns (85.1) 359.1 (444.2)
Decrease in lease obligations 317.5 258.6 58.9
New lease commitments and remeasurements (489.3) (261.0) (228.3)
Lease commitments and net debt relating to
consolidation of Ocado Retail (355.6) — (355.6)
Exchange and other non-cash movements (19.5) 29.3 (48.8)
Closing net debt including lease commitments (2,411.8) (1,779.8) (632.0)
1 Surrender payments have been split out from cash lease payments and are now within free cash flow
but no longer within free cash flow from operations.
2 Net debt now includes the M&S Travel Money Revolving Credit Facility agreement with Eurochange.
Free cash from operations was an inflow of £131.3m, which was £312.0m adverse to last
year. This was driven primarily by lower operating profit before adjusting items,
increased working capital outflow, increased capital expenditure and higher
adjusting items in cash flow. This was partially offset by reduced taxation.
The increased working capital outflow reflected higher receivables from growth in
Food sales, new wholesale partnerships in International, and incentive accruals in the
prior year. Fashion, Home & Beauty core and continuity stock balances were also
higher at year end.
Adjusting items in cash outflow increased by £77.7m. This was driven by £121.0m of
incident related costs, partially offset by the cash impact of the change in
arrangements for financial services in the prior year.
The consolidation of Ocado Retail resulted in a £76.0m increase in depreciation and
£78.9m increase in cash lease payments compared with the prior year.
Contributions to the defined benefit pension fund in free cash flow re-commenced in
the year.
Marks and Spencer Group plc Annual Report and Financial Statements 202622
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
FINANCIAL REVIEW CONTINUED
Cash flow continued
Acquisitions, investments, and divestments are driven by £110.9m of deferred
consideration for the acquisition of Gist.
The Group had closing net funds excluding lease liabilities of £338.2m at the end of
the period. The consolidation of Ocado Retail resulted in additional lease commitments
and loans from third parties, alongside new lease commitments from increased store
activity. Group net debt therefore increased to £2,411.8m.
Capital expenditure
52 weeks ended
28 Mar 26
£m
29 Mar 25
£m
Change vs
2024/25
£m
Total Maintenance 135.4 157.6 (22.2)
Property 364.4 270.1 94.3
Supply chain 115.0 67.8 47.2
Digital & Technology 40.2 81.2 (41.0)
Other 2.1 1.5 0.6
Total Growth & Cost Out 521.7 420.6 101.1
M&S capital expenditure before disposals 657.1 578.2 78.9
Property disposals (33.1) (48.3) 15.2
M&S Capital expenditure 624.0 529.9 94.1
Ocado Retail 12.7 — 12.7
Movement in accruals and other items (42.7) (71.3) 28.6
Capex and disposals as per cash flow 594.0 458.6 135.4
M&S capital expenditure before disposals increased from £578.2m to £657.1m
reflecting increased investment in new stores and supply chain, offset by reduced
spend on digital and technology and property maintenance.
Property capital expenditure focused on Food and includes £209.9m of investment in
new stores and extensions, £111.2m in renewals, and £40.3m of other property
investments, including energy efficiency and store environment improvements.
Supply chain expenditure, also largely focused on Food, reflects initial costs
associated with the Daventry National Distribution Centre, investment in new Food
capacity at the Avonmouth Regional Distribution Centre, and Fashion, Home & Beauty
online fulfilment capabilities.
Digital and Technology focused on investment in the new Sparks loyalty programme,
Fashion, Home & Beauty planning platform and online capabilities, and store technology.
Ocado Retail expenditure focused on investment in a new spoke site in Nottingham
as well as maintenance of existing distribution facilities.
Net debt
Group net debt increased £632.0m since last year primarily driven by the increase in
lease liabilities due to the consolidation of Ocado Retail.
52 weeks ended
28 Mar 26
£m
29 Mar 25
£m
Change vs
2024/25
£m
Cash and cash equivalents
1
997.2 864.5 132.7
Current financial assets and other
1
10.4 300.2 (289.8)
Medium-term notes (579.4) (717.1) 137.7
Ocado Retail borrowings (90.0) — (90.0)
Net funds excluding lease liabilities
2
338.2 447.6 (109.4)
Lease liabilities (2,750.0) (2,227.4) (522.6)
Group net debt (2,411.8) (1,779.8) (632.0)
1 Cash and cash equivalents represents cash held on deposit for under 90 days. Other financial assets
include funds on deposit for longer than 90 days.
2 Net funds now includes the M&S Travel Money Revolving Credit Facility agreement with Eurochange.
Medium-term notes include three bonds, with maturities out to 2037, and the
associated accrued interest. During the period, the June 2025 bond and May 2026
bond were repaid. In addition, part of the July 2027 bond was repaid.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 23
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
FINANCIAL REVIEW CONTINUED
Net debt continued
These repayments were partially offset by the issuance of a £300m bond, maturing in
August 2032. The USD $300m 2037 bond is valued by reference to the embedded
exchange rate in the associated cross currency swaps. The full breakdown of
maturities is as follows:
Issued bond principle and maturity date
Value
£m
July 2027, GBP 56.9
August 2032, GBP 300.0
December 2037, USD 252.9
Total principal value 609.8
Unamortised bond costs and effects of fair value hedges (38.6)
Interest and FX revaluation 8.2
Total carrying value 579.4
Lease Liabilities
28 Mar 26
£m
29 Mar 25
£m
Change vs
2024/25
£m
Average lease
length to
break
1
Full Line stores (851.9) (841.7) (10.2) c. 14 years
Food stores (736.2) (701.4) (34.8) c. 10 years
Offices, warehouses, ROI and other (542.4) (518.5) (23.9)
International (137.8) (165.8) 28.0
Ocado Retail
2
(481.7) — (481.7)
Total lease liability (2,750.0) (2,227.4) (522.6)
1 Liability-weighted average lease length to break, adjusted to exclude nine long leases.
2 Ocado Retail lease liabilities were included in Group consolidation from 6 April 2025 as M&S’s share
rights give accounting control from this date. The opening balance on consolidation was £333.8m
with the increase to £481.7m at FY primarily being due to a new lease liability of approximately £140m.
Full line store lease liabilities include £83m relating to stores identified as part of the
store estate strategic programme.
Food store lease liabilities include £34m relating to stores identified as part of the
store estate strategic programme.
Pension
At 28 March 2026, the IAS 19 net retirement benefit deficit was £79.2m (2024/25:
£122.7m deficit). There has been a decrease in the deficit since the start of the year
largely driven by the payment from the Scottish Limited Partnership of £45.0m.
The most recent actuarial valuation of the UK DB Pension Scheme was carried out as
at 31 March 2024 and showed a funding surplus of £288m.
The IAS 19 net retirement deficit differs from the actuarial valuation position for a
number of reasons, including timing and assumptions. The most notable difference is
the exclusion of the value of the Scottish Limited Partnership from the reported IAS 19
net retirement deficit, which is included in the actuarial valuation position.
As noted at the start of the year, the Company and Trustee have confirmed, in line
with the current funding arrangement, that no further contributions will be required
to fund past service because of this valuation, other than those contractually
committed under the Marks and Spencer Scottish Limited Partnership arrangements.
For further information on the Marks and Spencer Scottish Limited Partnership
arrangements see note 12 to the financial statements.
Liquidity
At 28 March 2026, the Group had liquidity of £1,872.1m (2024/25: £1,739.5m),
comprising cash and cash equivalents of £997.2m (2024/25: £864.5m), an undrawn
committed syndicated bank revolving credit facility of £850.0m (set to mature in
December 2030), and undrawn uncommitted facilities amounting to £25.0m.
Dividend
A final dividend of 3.0p per share has been declared. This will be payable on 10 July 2026
to shareholders on the register of members as at close of business on 5 June 2026.
Bringing full year dividend to 4.2p up 16.7% versus last year.
Statement of financial position
Net assets were £3,222.9m at the period end (2024/25 restated: £2,831.9m). The
increase in intangibles and property, plant and equipment from the consolidation of
Ocado Retail, as well as higher inventories, cash, and increased receivables, resulted
in an overall increase in net assets of £391.0m (13.8%) since the start of the year.
Marks and Spencer Group plc Annual Report and Financial Statements 202624
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
PEOPLE AND CULTURE
Transformation powered
byour people
Our colleagues are central to our
transformation and proud of the role
they play in serving the 34m customers
who shop with us each year. At M&S our
goal is to have a high-performance
culture that supports them to perform
at their best. This year we saw many
examples of this culture in action, and
the way it powers our business.
Throughout the cyber incident, our
teams were ‘sleeves rolled up’ and
relentlessly focused on serving our
customers. Their resilience and hard
work set the tone for the rest of the year,
reinforcing why our people are our
greatest strength.
The relaunch of Sparks also demonstrated
colleagues powering our transformation.
A significant strategic milestone, before
the new Sparks programme launched to
customers, colleagues trialled the new
Sparks experience.
By putting colleagues first and building
their knowledge in advance, customer
take up of the new Sparks scheme was
strong, driven by the support and
confidence of our colleagues in store.
Straight to Stuart is another source of
energy behind our transformation with
practical ideas to improve the way we
work straight from colleagues. Since
launching in May 2022, colleagues have
submitted more than 25,000 ideas, with
over 5,000 submitted this year alone.
Many are now embedded across stores,
Support Centres and supply chain
operations, including the introduction of
a gluten-free Colin the Caterpillar cake,
suggested by more than 25 colleagues.
Launched in January, it has sold almost
62,000 units to date, demonstrating the
value of ideas from colleagues closest to
customers and impact this can have.
Not just any job
We believe working at M&S should be
rewarding in every sense, through leading
pay, benefits and the opportunity to
share in the success of the business.
In March, we announced a £70m
investment to increase pay for UK retail
colleagues. Customer Assistant pay
increased 6.4%, more than double the
rate of inflation. Over the past four years
we have invested more than £350m in
retail pay, increasing hourly rates by
over34%.
Alongside pay, colleagues benefit from a
strong and competitive package unique
to M&S. This includes an uncapped 20%
colleague discount on M&S and branded
products, pension contributions of up to
12% and Holiday Buy for every colleague
across the business. Our Sharesave
scheme also offers colleagues a tangible
way to share in the growth of the business.
This year, more than 5,500 colleagues,
predominantly from stores, benefited
from Sharesave, with a collective profit
of £32m. Many colleagues have used this
to support significant life milestones,
from wedding dresses to house deposits.
We also extended colleague discount
access to more parts of the wider M&S
business, including Store Protection
Officers and Security Operations Centre
colleagues, as well as maintaining the
discount levels for teams in M&S
Opticians and Beauty Brands.
Our aim is to ensure M&S remains one
ofthe most rewarding places to work
inUK retail.
Creating a great place
towork
As well as rewarding colleagues, we want
M&S to be a great place to work which
means staying close to our colleagues,
listening to their feedback and acting
quickly on what they tell us.
Our Closer to Customers programme
plays an important role in connecting
colleagues across the business to stores
and ensuring we all act as one team.
Allsenior leaders spend their first four
weeks working in store, and all new
Support Centre colleagues spend three
days in store during their first week.
This year Support Centre colleagues
worked nearly 194,000 hours across
more than 650 stores, with a focus on
key trading periods. At Christmas, our
Elfers programme delivered over 93,000
hours of additional store support with
colleagues from across the business
working shoulder to shoulder to support
customers at our busiest time.
Two-way communication is also central
to building trust and momentum. Our
Pulse survey gives every colleague a
regular voice and helps us track progress
in embedding our behaviours and
building a high-performance culture.
Wealso closely monitor store manager
turnover given the critical role they have
in shaping the working experience of
both M&S and third-party colleagues.
The October 2025 survey saw a net
promoter score (NPS) of 66% in response
to the statement ‘I would recommend
M&S as a great place to work’ – down 10%
on the survey from March 2025 and 2%
down on the September 2024 survey.
Similarly, our store manager turnover
rate was 10% during the year. This, and
the results from the latest survey reflect
the hard work colleagues put in serving
customers through the cyber incident
and showed where we need to make
progress in how we work together
asabusiness.
Actions are already underway to reduce
tasks and support colleagues to spend
more time serving customers. As part of
our wider technology transformation, AI
and digital capabilities are increasing
across M&S, supporting stock forecasting
and ordering, marketing and powering a
colleague help hub.
In our most significant move to support
stores to date, we announced 11,000
colleagues, including every Store Manager,
will be supported by Microsoft Copilot
and AI tools. With AI supporting meeting
notes, sales insights, rotas and shift
handovers, managers are able to spend
more time making a difference on the
shop floor.
This year, hygiene and security colleagues
were also included in Pulse for the first
time and 82% said they would recommend
M&S as a great place to work. Participation
was lower – 20% for hygiene and 40% for
security – highlighting the opportunity
to better integrate these colleagues into
store teams through regular manager
catch ups, inclusion in team activity and
listening to ideas and feedback.
Our agency partner at Castle Donington,
Staffline, shared their colleague survey
results with us this year. Results were
ahead of Staffline’s overall benchmarks
across all four measures, with M&S
advocacy at 92% and Staffline’s NPS
improving from 39.6 to 49.5 across the
last three surveys.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 25
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
PEOPLE AND CULTURE CONTINUED
Creating a great place
towork continued
The Business Involvement Group (BIG),
our elected colleague representative
network, continued to be the voice of all
colleagues and offer invaluable insight
back to the business. National BIG
representatives from stores, Castle
Donington and Support Centres met with
Stuart Machin, CEO, every six weeks and
the National BIG Chair met with the
Board quarterly.
By being the voice of colleagues, BIG is well
placed to drive change and this year
supported colleagues through the
operational challenges created by the
cyber incident and helped bring more
benefits to colleagues, with enhanced
discount weeks throughout FY 2026/27
now planned. These are several examples
of BIG championing colleagues’ voices as
it approaches its 25th year ahead.
Opportunity for all
A high-performance culture does not
just happen; it is built everyday through
the expectations we set.
Hiring practices and leadership remained
in focus to ensure consistent high
standards. In the past year, more than
1,800 Support Centre managers completed
our foundational Licence to Hire module,
and our Raise the Bar programme,
designed to lift leadership capabilities
across M&S, was rolled out across the
entire organisation – including our
international markets.
Our Retail Future Leaders also continued
to support early career talent to thrive.
The programme puts graduates and school
leavers at the heart of our stores, where
they quickly take on real responsibility
inour fast-paced, customer-focused
environment.
This year, our programme supported 36
graduates and 21 degree apprentices
moving into management roles, 42% of
Retail Graduates progressed early into
Deputy or Store Manager roles, and
recruitment is underway for new cohorts
joining in September 2026.
Retail is a major driver of social mobility,
and M&S is committed to creating
opportunities for young people who are
furthest fromwork.
This year our Marks & Start employability
programme, run in partnership with The
King’s Trust, supported 608 young people
through the scheme. Of those who
completed a placement, 82% moved into
roles at M&S, and long-term progression
into sustained employment increased by
6% year on year.
The programme continues to bring new
perspectives and diverse talent into
M&S, with 37% of participants from
Colleague representation measurements
Female 51% (2024/25: 56%)
Male 49% (2024/25: 44%)
Gender balance of senior leaders**
** Senior leaders are the ‘senior management’ ofthe Company andincludes
ExCo and ExCo direct reports, but excludes Board members. The gender
breakdown of the Board is 60% female and40% male.
Read more on ExCo and Board director gender data on page49.
Female 43,200 (2024/25: 43,411)
Male 21,242 (2024/25: 20,082)
Total employees
66% (2024/25: 76)
NPS score October 2025 – percentage of those who agree or
strongly agree with the statement ‘I would recommend M&S as a
great place to work’ with a participation rate of74%.
Colleague engagement (The Pulse survey)
Gender pay gap
10.8% (2024/25: 12.2%)
Figure provided is mean pay gap. We are committed to driving equal
opportunities. Our focus is on continuing to make M&S a great place
to work for women and we know there is more to do in this space.
Read more in our Remuneration Report onpages 81 to 92.
ethnic minority backgrounds and 30%
declaring a disability. We were also
proud to see two colleagues, Lauren
Gibson and Ethan Gordon, receive
regional King’s Trust awards for their
impact and potential.
Meanwhile, our eight inclusion networks,
now with 11,000+ members, strengthened
governance, onboarded 13 new network
leads, and helped to make M&S a more
inclusive place to work. Our LGBTQ+
Network coordinated our Pride plans
again, seeing us take part in six parades
and celebrate our annual M&S pride day
internally, and our Gender Equality
network delivered impactful events
forboth International Women’s Day
andInternational Men’s Day, raising
awareness and driving allyship around
key challenges faced.
Looking ahead
Next year, our focus will be on
strengthening the talent and leadership
capability we need for the future,
simplifying the way we work so teams can
spend more time with customers, and
using technology and AI to remove
complexity and unlock capacity across
the business.
Alongside this, we will work even more
closely with BIG and our inclusion
networks to make sure colleague voices
are heard and help build a workplace
where everyone feels valued, respected
and able to be their best.
Together, these priorities will help us
accelerate the transformation of M&S –
creating a simpler, faster, more inclusive
business, powered by colleagues who are
proud of the part they play in our success.
5.3% (2024/25: 4.9%)
* Senior managers are measured using our internal reward levels, being
those who have the biggest influence and responsibility in driving and
delivering the Group’s strategy.
Read more in our Nomination Committee Report on page 57.
Senior managers* from ethnic minorities
Marks and Spencer Group plc Annual Report and Financial Statements 202626
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
ESG REVIEW
Our approach to ESG
At M&S, we have always built trust by doing
the right thing for our colleagues,
customers, and the communities we serve.
Thiscommitment has been at the heart
ofour business since thebeginning and
continues to be just as important today.
OurESG strategy, which we call Plan A,
isintegral to how we achieve our strategic
priorities: creating exceptional products,
driving profitable sales growth, and
achieving sustainable operating margins.
We continue to operate with a clear
androbust governance framework
thatunderpins delivery of Plan A.
TheExecutive Committee (ExCo), led by
the CEO, sets the strategic directionand
isaccountable for implementation,
withindividualdirectors responsible for
progress within their areasand the Retail
Director overseeing programme-wide
execution. The ESG Committee provides
strategic challenge andoversight, ensuring
our plans remain ambitious and aligned
tostakeholder expectations.
Our ESG Business Forum is a cross
-f
unctional
group of senior leaders and subject matter
experts. It plays a vital role in monitoring
progress against targets and supporting
effective decision making by ExCo and
theESGCommittee. More broadly, strong
governance remains central to how werun
our business. Every colleague hasa role
toplay by living our behaviour to ‘act
selflessly’, doing the right thing for the
long-term success of M&S, supporting
oneanother, and upholding our policies
and standards so we can wintogether.
Plan A is about delivering today while
preparing for tomorrow. So this year we
launched Plan A 2030, a strengthened
strategy focused on the ESG priorities
that will have the greatest impactand
matter most to our customers and
colleagues. Theseambitions are
designed to build a more resilient supply
chain, support stronger communities
and protect the quality, availability and
value our customers rely on. The plan
isunderpinned by a set of targets and
metrics, enabling us totrack progress
clearly, respond to emerging risks and
expectations, and maintain strong
oversight. We will continue toreport
transparently on how we manage ESG
impacts, risks and opportunities across
the business.
You can read more on our progress to date
andPlan A 2030 in our 2026 ESG Report.
Plan A. 2030
OUR ENVIRONMENTAL,
SOCIAL & GOVERNANCE
PLAN
How we deliver on this promise
ispartof the magic of M&S
For the environment For people For better business
We do what’s right for the
planet wherever we can. That
includes working closely with
nature, reducing emissions,
choosing more sustainable
materials and using less water.
We respect human rights,
encourage inclusivity and play
our part in supporting
communities near and far,
because people are at the
heart of our business.
Trust is everything. It drives us
to do things the right way, think
for the long term, and set the
bar high.
OUR CAMPAIGNS FOR 2030
Plan A is our promise to always source and make our products with care so you can trust us to do the right thing.
Doing the right thing Because there’s no plan b
From rewear and repair, to recycling
and resale, we’re redefining the future
of fashion. Because we believe that
quality and circularity are cut from
the same cloth.
5 million items given another life.
100% of textiles used in fashion and home from
preferred alternatives, excluding trims.
To create a better future for food,
wepartner with farmers to protect
theland, support rural communities,
and bring high-quality produce
toevery table.
Fresh British products available on shelves will come
from farms using regenerative practices.
Maintain commitment to sourcing 100% British
onkeyfresh proteins like Beef, Chicken, Pork and Eggs.
We’re using the power of M&S
tohelppeople realise the magic
oftheirpotential, by investing in
youngpeople,and opening doors
toopportunity and progression
inourstores and supply chain.
Helping 1 million people to realise the magic of
theirpotential.
Plan A for Another Life Plan A for Farming Plan A for Brighter Futures
Marks and Spencer Group plc Annual Report and Financial Statements 2026 27
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
TCFD
This section outlines how we have complied with the requirements of
UKLR6.6.6R(8) by including climate-related financial disclosures consistent with
theTask Force on Climate-related Financial Disclosures (TCFD) recommendations
andrecommended disclosures. This information also complies with the requirements
of the Companies Act 2006 as amended by the Companies (StrategicReport)
(Climate-related Financial Disclosure) Regulations 2022.
This year we updated our modelling to incorporate a range of emission projections.
Wealso refreshed input data with the latest carbon price estimates, sales figures,
andelasticity metrics.
TCFD disclosures index
TCFD pillars TCFD recommendation
Consistency
status Reference
Governance
A) Describe the board’s oversight of climate-related risks and opportunities.
Read more on pages
28-29.
B) Describe management’s role in assessing and managing climate-related
risks and opportunities.
Read more on page 29.
Strategy
A) Describe the climate-related risks and opportunities the organisation has
identified over the near, medium, and long term.
Read more on pages
30-33.
B) Describe the impact of climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial planning.
Read more on page
31-34.
C) Describe the resilience of the organisation’s strategy, taking into
consideration different climate-related scenarios, including a 2°C or
lowerscenario.
Read more on pages
35-36.
Risk
management
A) Describe the organisation’s processes for identifying and assessing
climate-related risks.
Read more on page 30.
B) Describe the organisation’s processes for managing climate-related risks.
Read more on pages
41-42 in Risk
Management.
C) Describe how processes for identifying, assessing and managing climate-
related risks are integrated into the organisation’s overall risk management.
Read more on page 30.
Metrics and
targets
A) Disclose the metrics used by the organisation to assess climate-related
risks and opportunities in line with its strategy and risk management process.
Read more on page 37.
B) Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas
emissions and the related risks.
Read more on pages
37-38.
C) Describe the targets used by the organisation to manage climate-related
risks and opportunities and performance against targets.
Read more on pages
38-39.
Read more in our
ESGReport.
Consistent Partially consistent
Governance
Board’s oversight of climate-related risks
and opportunities(TCFD governance A)
The Board holds ultimate accountability for risk
management and our ESG framework. This encompasses
the climate-related risks and opportunities that affect
our operations including physical and transitional
climate risks. The Audit & Risk Committee is tasked with
overseeing these risks and conducting biannual reviews
of principal risks, including those associated with
climate change and environmental stewardship.
Key elements of our risk management and ESG
framework include:
•
The Board establishes the risk appetite for essential
business areas, incorporating ESG considerations.
•
The Audit & Risk Committee receives biannual
updates from the leadership team responsible for
ESG oversight, including performance metrics that
align with our risk appetite.
•
The ESG Committee plays a crucial role in managing
ESG matters. This Committee convenes at least
quarterly and is responsible for:
–
Ensuring alignment between the Company’s ESG
purpose, business strategy and customer proposition.
–
Assessing the effectiveness of our ESG strategy
and governance, including climate-related issues.
–
Monitoring progress against established targets
through quarterly ESG reports.
–
Overseeing risk mitigation activities related
toclimate risks.
–
Supporting the overall risk management framework
by reviewing ESG-related risks andproviding
recommendations to the Audit&Risk Committee.
–
Reporting material ESG matters to the Board.
All members of the ESG and Audit & Risk Committees
are Non-Executive Directors, ensuring an independent
perspective on our climate-related governance.
Marks and Spencer Group plc Annual Report and Financial Statements 202628
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
TCFD CONTINUED
Governance continued
Board’s oversight of climate-related risks
and opportunities(TCFD governance A)
continued
For a detailed overview of our risk management processes
and governance please see pages 41 to 42. Additional
information about the Audit & Risk Committee’s
responsibilities can be found in the diagram to the right.
Management’s role in assessing and
managing climate-related risks and
opportunities (TCFD governance B)
As detailed in our risk management process (see pages
41-42), climate risks, including emerging areas, are
integrated into each business and functional risk review.
Business units assess the capital expenditure needed
for projects that address near-term climate-related
risks during the annual budgeting process.
•
Executive Committee (ExCo) members are responsible
for reviewing and confirming risks in their areas, as
well as evaluating the Group’s principal risks and
uncertainties at the half year and year end. This
ensures that significant risks are effectively
monitored and managed throughout the year.
•
The Executive Risk & Compliance Committee,
comprising a subset of ExCo members, supports with
oversight of ongoing risk and control, identifying
potential emerging issues and monitoring overall
adherence to expected standards.
•
The ESG Business Forum, chaired by the Retail Director
(ExCo ESG Sponsor), includes business leaders
accountable for ESG issues. The Forum manages
climate-related risks and opportunities, driving
progress against our ESG targets. Key updates on
ESG trends, including climate change, are shared with
the Forum by the ESG team. The Forum meets
quarterly, with summaries shared with both ExCo and
the ESG Committee (see governance structure to the
right for more details).
Governance structure
BOARD
Ultimate accountability for both risk management and ESG framework, including those risks and opportunities related to climate change.
Approves the Company’s ESG strategy, including the business-wide target to become net zero.
BOARD COMMITTEES
AUDIT & RISK COMMITTEE
•
Responsible for ensuring the effectiveness of the risk management
process.
•
Receives updates from business leadership on how the Company’s
principal risks and uncertainties are being appropriately addressed.
•
Twice a year, reviews the principal risks, of which climate change and
the environment isone.
•
Receives periodic updates on business performance against ESG
objectives, aswell as compliance and responsibility metrics.
ESG COMMITTEE
•
Responsible for ensuring the Company’s ESG strategy aligns with the
business strategy and customer proposition.
•
Responsible for ensuring the ESG strategy and associated governance is
fit for purpose, and that plans are in place and reported on.
•
Responsible for ensuring related policies are regularly reviewed
and updated and remain compliant with any relevant national and
international regulations.
•
Oversight of all ESG reporting and metrics.
•
Monitors the Company’s annual and overall performance against
previously set KPIs.
•
Approves the ESG strategy and KPIs, aswell as all ESG disclosures.
•
Advises the Audit & Risk Committee on ESG-related risks and
opportunities, including climate-related issues.
EXECUTIVE COMMITTEE
•
The Committee manages, monitors and provides the executive input
underlying M&S’ ESG strategic and operational decisions. It ensures strong
executive alignment on business priorities, investments and actions.
•
The CEO and ExCo are responsible for overseeing the development of
business-wide ESG strategic goals and accountable for delivery of the
ESG programme (including the roadmap towards net zero).
•
ExCo members are individually responsible for setting the ESG strategy
in their respective areasto achieve business-wide strategic goals and
putting in place mechanisms to deliver theirstrategy. This supports the
management of the climate-related risks and opportunities impacting
their areas.
•
ExCo members are individually responsible for reviewing and
confirming risks in their own areas as part of our risk management
process, including climate risks.
•
The Retail Director, a member of the ExCo, is responsible for the
coordination, reporting and aggregation of the business-wide ESG
programme, as well as horizon scanning and issues management.
They are also accountable for governance and overall delivery of
theESG strategy.
MANAGEMENT FORUMS
EXECUTIVE RISK & COMPLIANCE COMMITTEE
•
Supports the ExCo in the management ofrisks.
•
Supports the Audit & Risk Committee in its role of overseeing
business compliance with the Group Risk Policy and associated
corporate governancerequirements.
•
Responsible as a governance forum for overseeing the activities of
the relevant ExCo members and senior leadership accountable for
maintaining an effective risk management, control and assurance
framework across the business.
ESG BUSINESS FORUM
•
Responsible for driving progress against the targets of the
Company’s ESG programme, which mitigate our climate risks.
•
Meets quarterly to review progress and agree the right metrics and
targets on a forward-looking basis.
•
Updates ExCo and the ESG Committee on a quarterly basis on
progress against targets and emerging risks.
•
Accountable for managing climate-related risks and opportunities.
Includes representatives from Group Finance and Group Risk to
ensure ESG considerations arereviewed and considered within risk
management and financial planning.
BUSINESS AND FUNCTIONAL LEADERSHIP
•
Responsible for managing risks within their areas, including those
relating to climate, and implementing appropriate mitigation activities.
•
Responsible for monitoring emerging risks.
•
Responsible for monitoring and reporting on key ESG-related indicators.
•
Responsible for ensuring climate-related opportunities are realised
as part of their ESG strategy in their respective areas.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 29
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
TCFD CONTINUED
Risk management
Our process for identifying, assessing
and managing climate risk, andhow
this is integrated intooverall risk
management (TCFDriskmanagement
A, B and C)
The identification, assessment and management of
climate-related risks, including actions taken in line
with risk appetite, are integrated into our overall Group
risk management process. We assess climate-related
risks using the same consistent risk criteria as other
risks, considering proportional Group-level sales and
profit impacts, and these risks are embedded within
and disclosed through our principal Group risks. A
detailed description of our risk management framework
is on page 41 to 42.
In this process, each accountable business and function
assesses the potential consequences of climate risks,
referencing the TCFD Guidance Tables A1.1 and A1.2.
Specifically, they:
•
Analyse the impact of current and emerging climate-
related issues on their strategies, both in the near and
long term.
•
Use stakeholder insights to gauge the size and scope
of climate risks in alignment with our Group risk
assessment criteria.
•
Prioritise risks based on materiality and time horizon.
•
Evaluate the effectiveness of existing mitigating
controls.
•
Designate a risk owner for each identified risk.
•
Engage relevant leadership teams for further insight
and accountability.
The output of this is then reported onto a central
system to collate each business function’s core risks,
mitigating controls and actions, which includes climate
risks. The detail on specific climate risks is in Table 1 on
pages 31 to 33.
At the Group level, the ESG Business Forum provides
oversight by consolidating insights on various risks and
promoting transparency regarding progress against
our priorities. Following each meeting, the ExCo
receives updates to ensure informed decision making
and alignment with our strategic objectives.
At Board level, governance of this process is overseen
by the ESG and Audit & Risk Committees. Climate
change and the environment remain a principal risk
forthe business, as detailed on page 47.
Strategy
Identified climate-related risks and
opportunities (TCFDstrategy A)
We continue to monitor our climate-related risks and
opportunities. We consider both physical and transition
risks and opportunities and how we manage these over
the near, medium and long term. The following definitions
of time horizons were used to identify and manage
climate risks and opportunities. They were informed by
the Paris Agreement, which influences global policy
responses, the UNFCC data on physical risks and our
own Company’s science-based targets (SBTs).
Time horizons
Near <3 years Aligned to our risk
management and financial
planning processes.
Medium 3-10 years Captures transition risks and
opportunities, linked to both our
near-term SBTs and the
emerging risks included in our
risk management disclosure.
Long 10+ years Captures physical risks and
opportunities over the long
term. Linked to our long-term
net zero goals and the
emerging risks included in our
risk management disclosure.
Risk severity is determined through an assessment of
potential impact, with management judgement applied
to reflect the likelihood of risk materialisation across
relevant time horizons, and is classified as minor,
moderate, major or critical in line with the Group risk
assessment criteria.
Processes used to determine which risks and
opportunities could have a material financial
impact on the organisation
As part of the risk management process, we biannually
review our climate risks and opportunities to consider
any key changes, additions and ensure relevance.
Group risk assessment criteria
Almost
certain
4
Likely 3
Possible 2
Unlikely 1
1 22 3 4
Minor Moderate Major Critical
A summary of our climate-related risks and
opportunities in line with TCFD Guidance Table A1.1
andA1.2 is on the next page in Table 1. Risks are split
bysector, aligned to the P&L, rather than geography.
Marks and Spencer Group plc Annual Report and Financial Statements 202630
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Strategy continued
Impact of climate-related risks and opportunities on our businesses,strategy,andfinancialplanning(TCFDstrategy B)
In addition to summarising the risks and opportunities identified in Strategy A, Table 1 outlines our response. We have mapped relevant targets and metrics totherisks and
opportunities to highlight how we build resilience into the business strategy.
Table 1: Business-wide risk and opportunity summary
Risk/opportunity Sector
Time
horizon
Potential financial impact on
thebusiness Business response
*
Targets
1
Current and new
environmental
complianceincluding
legislation and tax
Transition risk:
Policy and legislation
Group wide/
Agriculture/
Food/
Fashion,
Home &
Beauty/
Property/
Fleet
N
M
L
Q
Increase in operating costs to
manage environmental compliance,
including carbon pricing, Extended
Producer Responsibility (EPR) and
Packaging Recovery Notes (PRNs),
with c. £38m incurred in FY 2025/26
for EPR and PRNs.
Summary of relevant quantitative
scenario analysis is in Strategy C.
Increase in capital expenditure for
owned assets such as refrigeration,
energy consumption and diesel fleet.
Capital expenditure on LED lighting,
store controls upgrades, voltage
optimisation, fridge doors, electric
vehicles are included in the Group’s
budget and three-year plan which
have been used to support
impairment reviews found on page
148 of the financial statements.
Group
•
Developing and implementing our decarbonisation
roadmap to meet our science-based targets.
Supply chain
•
Built net zero as a consideration into the sourcing
strategies for Food and Fashion, Home & Beauty.
•
Identified the suppliers with the greatest impact on
emissions in the supply chain as a key focus for
engagement and measured impact through Higg Index
and Secaro.
Our operations
•
Capital investment through proactive asset replacement is
integrated into the three-year financial plan to phase out
our F-gas refrigeration systems. New store specifications
include being 100% electric, with LED lighting in Foodhalls.
•
55% reduction in absolute Scope 1 and
2 emissions by FY 2029/30 from
FY2016/17 base year.
•
42% reduction in absolute Scope 3 E&I
emissions byFY 2029/30 from FY
2022/23 base year.
•
30.3% reduction in absolute Scope 3
FLAG emissions by FY 2029/30 from
FY 2022/23 base year.
•
Net zero emissions by FY 2039/40
across value chain.
•
100% packaging to be widely
recyclable by FY 2029/30.
See page 39 for exact wording of our
science-based targets.
2
Ability to keep pace
withcustomer trends
andbehaviours as we
see an increase in
consumer
preferences towards
more sustainable
productchoices
Transition risk:
Market and reputation
Opportunity:
Products and services
Food/
Fashion,
Home &
Beauty
N
M
N
Revenue opportunity from climate
conscious customers who want to
choose low-carbon products.
Revenue loss if we do not keep pace
with customer trends and develop
suitable low-carbon product offerings.
While no financial impact is
currently disclosed due to
limitations in available
methodologies and assumptions,
this will continue to be reviewed as
reporting requirements and data
maturity evolve.
Our products
•
Quarterly review of shoppers’ sustainability preferences
and perceptions through our Brand Reputation Tracker.
•
Ongoing investment in innovation and new product and
proposition development to ensure we develop suitable
low-carbon products to maximise customer preferences.
•
In Food, we continue to maintain at least 50% of sales
from fruit and vegetables, vegetarian and vegan
products. We have verification and certification targets in
place for key raw materials. We also have a product
carbon footprinting tool called Mondra which helps with
product development decision making.
•
In Fashion, Home & Beauty, we continue to focus on
alternative raw materials and explore circular solutions
for customers through our ‘Another Life’ programme.
•
100% of soy to be sourced from verified
deforestation- and conversion-free
supply chains by FY 2025/26.
•
100% segregated RSPO certified palm
oil in own-brand food products by
FY2025/26.
•
100% of cotton from moreresponsible
sources by FY 2025/26.
•
100% verified recycled polyester by
FY2025/26.
•
100% of MMCF from moreresponsible
sources by FY 2025/26.
* More information on specific programmes can be found in our ESG Report.
You can read more in our 2026 ESG Report.
TCFD CONTINUED
Key to time horizon and potential impact on the business:
N
Near term (<3 years)
M
Medium term (3-10 years)
L
Long term (>10 years)
Q
Quantified
I
Immaterial
N
No meaningful quantification
Marks and Spencer Group plc Annual Report and Financial Statements 2026 31
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Key to time horizon and potential impact on the business:
N
Near term (<3 years)
M
Medium term (3-10 years)
L
Long term (>10 years)
Q
Quantified
I
Immaterial
N
No meaningful quantification
TCFD CONTINUED
Strategy continued
Table 1: Business-wide risk and opportunity summary continued
Risk/opportunity Sector
Time
horizon
Potential financial impact on
thebusiness Business response
*
Targets
3
Availability of
low-carbon
technological
solutions and
infrastructure to
support low-carbon
activities e.g. low and
zero carbon fleet
options
Transition risk:
Technology
Group wide/
Property/
Fleet
M
N
Increase in capital and operational
expenditure required to source
low-carbon technology and
infrastructure needed to achieve
our net zero goals.
While no financial impact is
currently disclosed due to
limitations in available
methodologies and assumptions,
this will continue to be reviewed as
reporting requirements and data
maturity evolve.
Group
•
Developing and implementing our decarbonisation
roadmap to achieve our science-based targets.
•
Proactively managing the need for new low-carbon
technological solutions and infrastructure to
support our journey to net zero.
Our operations
•
Moving away from gas heating systems to
fullyelectric.
•
Switching to electric and bio-fuel vehicles and
installing electric vehicle infrastructure.
•
55% reduction in absolute Scope 1 and 2
emissions by FY 2029/30 from FY 2016/17
base year.
•
42% reduction in absolute Scope 3 E&I
emissions by FY 2029/30 from FY 2022/23
base year.
See page 39 for exact wording of our
science-based targets.
4
Energy efficiency
andresilience in
ouroperations
andsupply chain
Transition risk: Market
Opportunity: Resource
efficiency and energy
source
Group wide/
Property/
Food/
Fashion,
Home &
Beauty
M
Q
Increased costs in our supply chain
caused by rising energy costs if
energy efficiency or greener
solutions are not put in place.
Potential impact of £nil-£10m if
notmitigated.
Reduction in operational costs if
energy consumption is effectively
managed.
Opportunity to reduce reliance on
grid electricity by generating
renewable energy.
Supply chain
•
Working with suppliers to reduce energy
consumption and move to renewable alternatives.
Examples include our RE:Spark supply chain
renewable energy programme, and our Food
supplier ‘key asks’ which include setting science-
based targets and purchasing renewable energy.
Our operations
•
Continuing to integrate energy efficiency measures
such as fridge doors. We have also continued our
trial of Jet Seals, an airflow management system
designed to reduce cold air escaping from fridge
cases to lower energy consumption.
•
55% reduction in absolute Scope 1 and 2
emissions by FY 2029/30 from FY 2016/17
base year.
•
42% reduction in absolute Scope 3 E&I
emissions by FY 2029/30 from FY 2022/23
base year.
•
30.3% reduction in absolute Scope 3 FLAG
emissions by FY 2029/30 from FY 2022/23
base year.
•
Net zero emissions by FY 2039/40 across
value chain.
See page 39 for exact wording of our
science-based targets.
5
Failure to meet our
public climate
change commitments
Transition risk:
Reputation
Group wide
M
L
N
Reputational impact of failure to
meet our net zero targets leads to
lower sales and makes it harder to
attract and retain customers,
colleagues and investors.
While no financial impact is
currently disclosed due to
limitations in available
methodologies and assumptions,
this will continue to be reviewed as
reporting requirements and data
maturity evolve.
Group
•
Net zero goal incorporated into the strategic pillars
of our business transformation with a set of clear
metrics for accountable business owners.
•
Quarterly updates on climate targets at our ESG
Business Forum, which then feeds into updates to
ExCo and the ESG Committee. See page 29 for
more information on our governance structure.
•
Continue supporting innovation with suppliers and
partners to reduce emissions through the Plan A
Accelerator Fund.
•
55% reduction in absolute Scope 1 and 2
emissions by FY 2029/30 from FY 2016/17
base year.
•
42% reduction in absolute Scope 3 E&I
emissions by FY 2029/30 from FY 2022/23
base year.
•
30.3% reduction in absolute Scope 3 FLAG
emissions by FY 2029/30 from FY 2022/23
base year.
•
Net zero emissions by FY 2039/40 across
value chain.
See page 39 for exact wording of our
science-based targets.
* More information on specific programmes can be found in our ESG Report.
Marks and Spencer Group plc Annual Report and Financial Statements 202632
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Strategy continued
Table 1: Business-wide risk and opportunity summary continued
Risk/opportunity Sector
Time
horizon
Potential financial impact on
thebusiness Business response
*
Targets
6
Reliance on third
parties, local
Government and
broader infrastructure
to achieve our
mitigation actions
Transition risk: Market
Opportunity: Policy
Group wide
M
L
N
Increased capital and operational expenditure
required to meet our net zero goals, e.g.
increased cost in renewable energy procurement
if grid decarbonisation is not delivered.
While no financial impact is currently
disclosed due to limitations in available
methodologies and assumptions, this will
continue to be reviewed as reporting
requirements and data maturity evolve.
Group
•
Collaborate closely with industry bodies, including
the Business Retail Consortium (BRC) and Institute
of Grocery Distribution (IGD), to ensure we are
working towards the same goals.
•
Proactively engage with Government to ensure that
broader policy and infrastructure will support the
retail industry on decarbonisation.
•
No specific target – managed
through industry collaboration and
policy engagement.
7
Failure to meet the
requirements of our
franchise partners
based on the impact
of climate change on
our supply chain
Transition risk:
Reputation
Physical risk: Acute
andchronic
International
M
N
Reputational impact due to failure to meet
the requirements of our partners. Loss of
revenue from not being able to provide
necessary stock to partners.
While no financial impact is currently
disclosed due to limitations in available
methodologies and assumptions, this will
continue to be reviewed as reporting
requirements and data maturity evolve.
Our operations
•
Apply learnings from events that have impacted
global and individual supply chains, such as the
invasion in Ukraine; disruption to key shipping
routes; or events impacting specific regions, to
help inform how the business can adapt. This helps
to ensure we can meet partner requirements,
irrespective of the cause of the disruption.
•
No specific target – managed
through franchise service
agreements and engagement.
8
Volatility in the
supply of raw
materials caused by
the impact of climate
change
Physical risk: Acute
andchronic
Agriculture/
Food/
Fashion,
Home &
Beauty
N
M
L
I
Increase in sourcing costs based on supply
chain disruption caused by increased
likelihood of extreme weather.
Summary of relevant quantitative scenario
analysis is in Strategy C.
Loss of revenue if we cannot source
specific products due to the impact of
physical climate risks.
Our products
•
Continuing to track financial impact of climate
change on fresh produce to identify hotspots and
impact on the business.
•
Strengthened our focus on supporting producers as
they transition to net zero. Putting greater
emphasis on resilience in our standards and
partnerships, such as Fairtrade.
•
Increased focus on regenerative agriculture, through
our Plan A for Farming programme and work with
Better Cotton.
•
Maintain 100% Fairtrade certified
tea and coffee.
•
100% of cotton from more
responsible sources by FY 2025/26.
9
Managing
infrastructure and
operations (both
owned and supply
chain) in extreme
weather
Physical risk: Acute
Group wide/
Property/
Fleet
N
M
L
I
Loss of revenue from increased likelihood
of extreme weather events (e.g. flooding
or extreme temperatures) leading to closures
of stores, distribution centres and key
transport hubs.
Summary of relevant quantitative scenario
analysis is in Strategy C. Potential financial
impact of flood risk to UK property estate
is immaterial.
Our operations
•
To support with the management of extreme
weather events, we have robust business continuity
procedures in place for key sites.
•
No specific target – addressed via
resilience planning and investment
in adaptive infrastructure.
* More information on specific programmes can be found in our ESG Report.
Where targets are not directly linked to GHG emissions, progress is monitored using defined internal key performance indicators. See the ESG Report for more information.
TCFD CONTINUED
Key to time horizon and potential impact on the business:
N
Near term (<3 years)
M
Medium term (3-10 years)
L
Long term (>10 years)
Q
Quantified
I
Immaterial
N
No meaningful quantification
Marks and Spencer Group plc Annual Report and Financial Statements 2026 33
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
TCFD CONTINUED
Strategy continued
How climate-related issues serve as an input
to our financial planning process
We continue to model the financial impact of the
business’ carbon reduction initiatives. By doing so,
weincorporate spend associated with certain projects
linked to climate-related risks and opportunities into
the annual budget and three-year financial planning
process, both approved by the Board. We have included
the capital expenditure required to manage the impact
of climate-related risks in our operations and the profit
impact from climate-linked products and services;
forexample, capital investment in the store estate
toimprove energy efficiency. This financial planning
process forms the cash flow projections in our going
concern and impairment assessments (see pages 118
and 148 formore details).
Our approach to decarbonisation
The diagram illustrates how we are cutting emissions
across our value chain through four interconnected
focus areas: efficient operations, responsible sourcing,
sustainable manufacturing, and waste and circularity,
all underpinned by strong governance. Together, these
actions form the foundation of our decarbonisation
plan and build a more resilient, sustainable business
forthe future.
More information can be found in our ESG Report.
OUR APPROACH TO DECARBONISE OUR BUSINESS
Efficient operations
Reducing emissions
across store and
logistics operations
Responsible sourcing
Protecting nature and
securingsupply
Sustainable
manufacturing
Better production
through supplier
partnerships
Waste and circularity
Reducing waste through
smarter design and
reuse
•
Cutting operational
emissions through energy
efficiency, electrification
and network
improvements.
•
Upgrading stores via our
rotation programme,
removing gas and
reducing emissions.
•
Rolling out energy
efficiency projects and
expanding renewable
energy generation and
procurement.
•
Transitioning fleet from
diesel to bio-CNG
(compressed biomethane)
and electric vehicles.
•
Strengthening the
sustainability and
resilience of key materials
and ingredients.
•
Transitioning to
lower-carbon, recycled
and organic materials.
•
Supporting regenerative
and nature-positive
farming through the Plan
A for Farming programme.
•
Delivering deforestation-
and conversion-free
commitments for soy,
palm and other raw
materials.
•
Improving traceability for
high-impact materials,
including Better Cotton.
•
Partnering with suppliers
to reduce emissions and
improve manufacturing
performance.
•
Accelerating lower-carbon
technologies through the
Plan A Accelerator Fund.
•
Scaling renewable energy
uptake in supply chains
through RE:Spark.
•
Enhancing supplier data
visibility and embedding
our key asks for Food
suppliers, including
science-based targets.
•
Designing out waste and
scaling circular solutions
across the business.
•
Maintaining zero
operational waste to
landfill and reducing food
waste through
redistribution.
•
Removing unnecessary
packaging and increasing
recyclability.
•
Expanding reuse
initiatives, including
Refilled and hanger reuse.
•
Scaling rewear, repair and
resale through our
Another Life programme.
•
Working with recycling
partners such as Circulose
and Reverse Resources.
What powers this journey?
Innovation
Scaling lower-carbon solutions
through investment and
partnerships, including the
PlanA Accelerator Fund.
Technology
Tools to measure emissions,
capture supplier data, improve
energy efficiency, and adopt
renewable technology.
Engagement
Driving action across our value
chain by engaging suppliers,
partners, and customers, and
upskilling our teams.
Governance & Risk Management: Keeping us on track
Oversight sits with the ESG Business Forum, ExCo and ESG Committee.
We report annually against our GHG targets and disclose under TCFD.
Climate risks are integrated into strategic planning, investment decisions and capex.
Marks and Spencer Group plc Annual Report and Financial Statements 202634
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
TCFD CONTINUED
Strategy continued
The resilience of our strategy, taking
into consideration different climate-
related scenarios (TCFD strategy C)
Quantitative scenario analysis
Quantitative scenario analysis is a valuable tool to help
us understand the potential impact of risks and
opportunities we have identified. As there have been no
significant changes to either our business or our climate
risks and opportunities, we have updated our scenario
analysis on four areas previously analysed: Property,
Fleet, Protein and Cotton. These were selected following
a materiality assessment which considered the potential
climate-related impact and the impact on financial
performance to M&S, while ensuring fair and balanced
reporting across the accountable businesses.
Our updates this year included refreshing input data
with the latest carbon price estimates, sales volumes,
and elasticity metrics for cotton and protein. We also
incorporated our emissions projection scenarios into
the carbon tax models to reflect expected forecasts.
An informed qualitative judgement on the likelihood
ofrisk materialisation by 2030 was made to assess
impact specific to the M&S business case. No changes
were made to scenario design or the underlying
modelling methodology.
For cotton, the estimated unmitigated impact has
reduced compared to the prior year, reflecting a revised
assessment that a carbon tax on retailers’ Scope 3
emissions by 2030 is now less likely.
The analysis looked at the impact of three plausible
future states. We assessed two transition scenarios and
one physical climate impact scenario. The transition
scenarios model average global temperature increases
of 1.5˚C by 2100 (a low-carbon scenario) and 2˚C by 2100
(a moderately higher-emissions alternative). The physical
climate impact scenario models an average global
temperature increase of 4˚C by 2100.
These scenarios were selected to illustrate the potential
impacts of both transition and physical climate risks.
The 1.5˚C pathway represents an ambitious global
decarbonisation trajectory and therefore a high level of
transition risk. The 2˚C pathway provides a more moderate
scenario that aligns more closely with current global
trajectories. Both transition scenarios assume the
introduction of a carbon tax. In contrast, the 4˚C
pathway reflects low levels of Government intervention,
resulting in more frequent and severe weather events
and therefore greater physical risk.
Consistent with previous years, the results of the
scenario analysis are included in Table 2. We have
aligned the financial impact criteria to the Group risk
assessment criteria as follows:
Financial impact
Minor <1% impact on sales and PBT
Moderate 1-3% impact on sales
1-5% impact on PBT
Major 3-5% impact on sales
5-10% impact on PBT
Critical >5% impact on sales
>10% impact on PBT
Business resilience
The scenario analysis indicates that the introduction of
a carbon tax in 2030 could present a potential transition
risk, with an estimated unmitigated operating profit
impact across Property, Fleet, Protein and Cotton of
£54m to £115m. This range represents the aggregation of
the lower- and upper-bound unmitigated operating
profit impacts across Property, Fleet, Protein and
Cotton as presented in Table 2, based on the scenario
model outputs. The application of such a tax to Scope 3
emissions by 2030 remains uncertain. However, the
analysis reinforces the importance of continued
progress toward our FY 2029/30 emissions reduction
targets, particularly across our value chain, where
approximately 96% of our total emissions arise.
Through our work to identify emission reduction
initiatives across the business and the projected cost,
we understand the financial impact of meeting our
emissions reduction targets and have accounted for
this in the three-year plan. Moreover, even if significant
issues meant we were unable to deliver on the mitigations,
we would be able to absorb the impact of the carbon
tax calculated in Table 2, given the health of our
balance sheet.
To support the requirement for greater collaboration,
research and development, we launched our ‘Plan A
Accelerator Fund’ in 2022. This commits £1m annually to
fund or co-fund projects that tackle emissions challenges
and scale solutions with partners. These actions will
play a role in strengthening the resilience of our strategy
to the climate-related risks and opportunities identified
in the near term.
More information on the projects can be found in our
ESGReport.
While the physical risks identified in the scenario
analysis are quantified as immaterial, we are aware fresh
produce supply is especially vulnerable to unpredictable
weather patterns and extreme weather events. In Food
we have continued to identify root causation, vulnerable
hotspots and the impact on the business when we have
to use contingency sourcing, to ensure we can identify
whether physical climate risk is an emerging material
risk. In the prior year, we implemented a system update
to better capture this data so that we can review future
trends in financial reporting. The underlying scenario
models were first developed in FY2021/22 and have
been updated where relevant; further model
redevelopment is planned to reflect the evolving
considerations described above.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 35
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
TCFD CONTINUED
Strategy continued
Table 2: Quantitative scenario analysis summary
Area Scope
Risk/opportunity category
(as identified in Table 1) Risk modelled
Impact of climate risk on
financial performance in
2030, assuming no mitigation
actions
Quantification
of impact Targets in place to manage these risks
Property
UK property
estate
(including
Gist
properties)
Current and new
environmental
compliance including
legislation and tax.
Carbon tax on Scope 1
and 2 emissions
Potential operating
profit impact of £5m
to£30m
C
55% reduction in absolute Scope 1 and 2
emissions by FY 2029/30 from FY 2016/17
base year.
Managing
infrastructure and
operations (both owned
and supply chain) in
extreme weather.
Flood risk Immaterial
D
N/A
Fleet
UK fleet
(including
Gist)
Current and new
environmental
compliance including
legislation and tax.
Carbon tax on Scope 1
and 2 emissions
Potential operating
profit impact of £4m
to£20m
C
55% reduction in absolute Scope 1 and 2
emissions by FY 2029/30 from FY 2016/17
base year.
Protein
UK and
Ireland
sourced
beef, lamb,
pork, chicken
and turkey
products
Current and new
environmental
compliance including
legislation and tax.
Carbon tax on
agricultural emissions
(to the farm gate)
Potential operating
profit impact of £35m
to £45m
B
30.3% reduction in absolute Scope 3 FLAG
emissions by FY 2029/30 from FY 2022/23
base year.
Volatility in the supply
of raw materials caused
by the impact of
climate change.
Extreme weather events
and chronic climate
change impact on
agricultural production
Immaterial
D
N/A
Cotton
Globally
sourced raw
material
used in our
clothing
Current and new
environmental
compliance including
legislation and tax.
Carbon tax on
agricultural (seed to
farm gate) and
manufacturing (all
steps in cotton
production) emissions
Potential operating
profit impact of £10m
to£20m
C
30.3% reduction in absolute Scope 3 FLAG
emissions by FY 2029/30 from FY 2022/23
base year.
100% of cotton from more responsible
sources by FY 2025/26.
Volatility in the supply
of raw materials caused
by the impact of
climate change.
Extreme weather events
and chronic climate
change impact on
agricultural production
Immaterial
D
N/A
Key to quantification of impact:
A
Critical
B
Major
C
Moderate
D
Minor
Marks and Spencer Group plc Annual Report and Financial Statements 202636
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
TCFD CONTINUED
Metrics and targets
Metrics used to assess climate-related
risks and opportunities (TCFD metrics
and targets A)
All related ESG metrics and targets linked to our
climate-related risks and opportunities are highlighted
in our Strategy section in Tables 1 and 2. Some targets
listed in these tables conclude in FY 2025/26.
Asperpage 27 we have launched our new 2030 Plan A
strategy, introducing a fresh set of ambitious, forward-
looking targets to accelerate progress. In this strategy
we consider other climate-related metrics and targets.
However, our focus remains on our GHG emissions
metrics, which feed into the near and long-term emissions
reduction targets that are aligned to the UN ambition
to limit global warming to 1.5˚C. We continue to seek
opportunities that address interconnected climate,
environmental, and social challenges, enabling
synergies that deliver meaningful impact across our
value chain and support accelerated progress towards
our net zero target.
We have previously tested a shadow internal carbon
price and as part of our Climate Transition Plan work,
wewill explore ways we can re-introduce this for
relevant areas of the business.
The Remuneration Committee’s view remains the same
regarding the inclusion of ESG-related measures in the
Performance Share Plan (PSP). As ESG and climate
commitments are embedded in our business operations,
they are already reflected in the achievement of our
existing bank of PSP strategic measures. The Committee
therefore agreed that including a separate ESG measure
would not further our Plan A ambition. This will remain
under consideration in future years.
Scope 1, 2 and 3 greenhouse gas
emissions (TCFD metrics and targets B)
Scope 1 and 2
Scope 1 and 2 carbon emissions, reported in line with
the Greenhouse Gas (GHG) Protocol, result mainly
fromoperating our logistics fleet and powering stores,
offices and warehouses. The table on page 38 outlines
the FY 2025/26 Scope 1 and 2 emissions, reported in line
with the Streamlined Energy and Carbon Reporting
(SECR) requirements. Across the business, we capture
the data and calculate these emissions on technology
platform Sphera. This data has received limited
assurance by Deloitte. This year, we have achieved
a38%reduction inour Scope 1 and 2 emissions
compared to our baseline year. More information
isinour ESG Report.
Scope 3
We have continued collaborations with the following
industry partners to measure our product footprint and
access more supplier data so we can have a better
understanding of emissions hotspots:
•
Higg Index for supply chain sustainability in Fashion,
Home & Beauty.
•
Secaro for Tier 1 Food suppliers to share site-specific data.
•
Mondra for product-level carbon footprinting for
food, integrating supplier data for greater accuracy.
Data from Mondra has fed into Food’s 2024/25 Scope 3
emissions. With Fashion, Home & Beauty, we have worked
with third party, South Pole, to update the inventory for
FY 2024/25, utilising data from the Higg Index.
The chart on the next page discloses the updated
FY 2024/25 Scope 3 emissions data, which has been
calculated in line with the GHG Protocol. To report
more accurate Scope 3 emissions and be able to bring
in supplier-specific data, we continue to report a year
inarrears.
This year, we are reporting an increase in Scope 3
emissions of 0.9m tCO
2
e, compared to our Scope 3 FY
2022/23 base year. This increase has come from volume
growth in our Food business. Further, the impact of
current decarbonisation initiatives is not yet fully
reflected. Through our SBTi revalidation process, we
have accounted for growth in our plans to achieve our
targets and work is underway to close the remaining
gap by identifying additional reduction opportunities
within our Scope 3 emissions. More information can be
found on pages 38 to 39 (TCFD Metrics and Targets C).
The methodologies used to calculate energy consumption,
greenhouse gas emissions and other key metrics are applied
consistently across TCFD and SECR disclosures, with further
detail provided in our ESG Report and Basis of Reporting.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 37
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
TCFD CONTINUED
Streamlined Energy and Carbon Reporting
Energy efficiency initiatives
•
Our store rotation programme continues to deliver results, with new and renewal store specifications designed
for greater efficiency and lower carbon impact.
•
Improved in-store energy efficiency through LED swap-outs, HVAC-controls upgrades and voltage-optimisation
installations, delivering £748k in savings and 3.1 MWh in energy reductions this year, with continued rollout planned.
•
We have accelerated the transition of our logistics fleet to lower-emission vehicles, introducing 132 new bio-CNG
(compressed biomethane) tractor units. This is supported by an onsite mobile refuelling unit and expansion of our
Battery Electric Vehicle HGV fleet, supported by new charging infrastructure across key distribution centres.
•
We are optimising logistics operations for efficiency while supporting wider business requirements. For example
through route planning, improved trailer utilisation and modal shift from road to rail.
Energy consumption (GWh)*
M&S Group Ocado Retail Limited
2025/26 2024/25 ^ % change 2025/26 2024/25 % change
UK Operations 1,377 1,364 1% 1.6 1.8 -8%
International Operations 73 78 -6% — — —
Group 1,450 1,442 1% 1.6 1.8 -8%
Greenhouse gas emissions (000 tonnes CO
2
e)*
M&S Group Ocado Retail Limited
2025/26 2024/25 ^ % change 2025/26 2024/25 % change
Scope 1 emissions 202 211 -4% 0.04 0.13 -67%
of which UK 198 207 -4% 0.04 0.13 -67%
Scope 2 emissions (location based) 133 151 -11% 0.23 0.25 -8%
of which UK 101 116 -13% 0.23 0.25 -8%
Total location-based Scope 1 and 2 emissions 335 361 -7% 0.27 0.38 -29%
of which UK 300 323 -7% 0.27 0.38 -29%
GHG intensity per 1,000 sq ft of sales floor (M&S
Group) and per 100,000 orders (Ocado Retail Ltd.) 18 19 -6% 1.06 1.66 -26%
Scope 2 emissions (market based) 194 175 11% 0 0 —
Total market-based Scope 1 and 2 emissions 396 386 3% 0.04 0.13 -67%
of which UK 364 351 4% 0.04 0.13 -67%
^ Performance for last year has been re-stated to reflect data improvements.
* Note that percentage change and summed total figures on this table may not align precisely due to rounding.
SCOPE 3 EMISSIONS
2024/25 (tCO
2
e)
Purchased goods & services
– FLAG (Category 1) 54%
Purchased goods & services
– E&I (Category 1) 37%
Capital goods (Category 2) 3%
Fuel and energy related
activities (Category 3) 1%
Upstream transportation and
distribution (Category 4) 3%
Other categories 3%
7.6m
Targets used to manage
climate-related risks and opportunities
(TCFD metrics and targets C)
Last year we updated our Scope 3 emissions reduction
targets to consider FLAG (Forest Land and Agriculture)
guidance, as well as an updated base year. This means
we have Scope 3 targets separated out to cover our
FLAG and Energy and Industry (E&I) related GHG
emissions. Our Scope 1 and 2 targets remain unchanged.
Our near and long-term science-based emissions
reduction targets have been approved with the SBTi.
They have verified our net-zero science-based target
by2040.
Our ESG Report outlines all the targets we use to
manage our ESG performance, including those relevant
to managing our climate-related risks and opportunities.
Marks and Spencer Group plc Annual Report and Financial Statements 202638
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Growth
Reductions
Gap
Total
Total baseline
emissions
Expected
emissions from
business as usual
growth
Food Fashion, Home
&Beauty
Operations 2030 total
emissions from
identified
reductions
Scope 3
unidentified
reductions
2029/30 target
Scope 3
2
Scope 3
-0.7
-2.9
-0.7
-0.4
Identified reductions
Scope 1 & 2
7.2
5.2
Scope 3
Scope 1 & 2
Scope 1 & 2
4.5
TCFD CONTINUED
Our science-based targets
Overall net zero target
•
M&S commits to reach net-zero
greenhouse gas emissions across
the value chain by FY 2039/40.
Near-term targets
•
E&I: M&S commits to reduce absolute
Scope 1 and 2 GHG emissions 55% by
FY 2029/30 from a FY 2016/17 base
year.* M&S also commits to reduce
absolute Scope 3 GHG emissions 42%
by FY 2029/30 from a FY 2022/23
base year.*
•
FLAG: M&S commits to reduce
absolute Scope 3 FLAG GHG
emissions 30.3% by FY 2029/30
from a FY 2022/23 base year.**
•
M&S commits to no deforestation
across its primary deforestation
linked commodities, with a target
date of December 31, 2025.***
Long-term targets
•
E&I: M&S commits to reduce
absolute Scope 1 and 2 GHG
emissions 90% by FY 2034/35 from
a FY 2016/17 base year.* M&S also
commits to reduce absolute Scope
3 GHG emissions 90% byFY 2039/40
from a FY 2022/23 baseyear.*
•
FLAG: M&S commits to reduce
absolute Scope 3 FLAG GHG
emissions 72% by FY 2039/40 from
a FY 2022/23 base year.**
* The target boundary includes land-related
emissions and removals from bioenergy
feedstocks.
** The target includes FLAG emissions
andremovals.
*** Our SBTi-validated deforestation target
to 2025 has now concluded. We are
reviewing our approach and intend to set
an updated target aligned with evolving
guidance and regulatory requirements.
Our reduction pathway
We have identified decarbonisation measures across the business that will shape
our pathway to 2030. Each measure identified has been costed and built into
business plans. Together, these measures represent 85% of the reductions
required to meet our 2030 targets.
We are on track to meet our 2030 Scope 1 and 2 emissions target, and work is
underway to close the remaining gap by developing additional reduction
opportunities within our Scope 3 emissions.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 39
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT
The table below identifies where information can be found on our commitment to, and management of, colleagues, communities, the environment, human rights, and
anti-bribery and corruption in the last 12 months, as required by Sections 414CA and 414CB of the Companies Act 2006.
•
Policies on these matters can be found at corporate.marksandspencer.com.
•
Our business model can be found on page 5.
•
Non-financial key performance indicators can be found on pages 1, 11, 12 and 26.
Reporting requirement Policies, documents and reports which outline our approach More information and outcomes Page numbers
Colleagues Code of Conduct
Diversity, Equity, Inclusion and Equal Opportunities Policy
People Principles
Stakeholder Engagement and S.172 Statement
People and Culture
Board and Senior Management Diversity
Nomination Committee Report
6 to 9
25 to 26
26, 49 and 57
56 to 57
Environmental matters Climate and Energy Policy
Food Waste Policy
Product Packaging Policy
TCFD Report
Stakeholder Engagement and S.172 Statement
ESG Report 2026
28 to 39
6 to 9
Communities and
socialmatters
Charity Partnerships and Fundraising Policy
Trading Standards and Consumer Protection Policy
Food & Product Safety and Integrity Policy
Farm Animal Health & Welfare Policy
Responsible Marketing Principles
Laws that Protect Grocery Suppliers (GSCOP) Policy
Supply Chain and Responsible Sourcing Policy
Stakeholder Engagement and S.172 Statement
ESG Committee Report
ESG Report 2026
Grocery Supply Code of Practice (GSCOP) Compliance Report
6 to 9
58 to 59
Human rights Modern Slavery Statement
Human Rights Policy
Code of Conduct
M&S Global Sourcing Principles
M&S Young Worker and Child Labour Policy
M&S Grievance Procedure for Food and Fashion,
Home&Beauty Supply Chains
ESG Committee Report
ESG Report 2026
58 to 59
Anti-bribery and
anti-corruption
Anti-Bribery and Corruption Policy
Code of Conduct
Other Disclosures 93 to 98
Principal risks Group Risk Management Policy Risk Management Framework
Principal Risks and Uncertainties
TCFD Report
41 to 42
43 to 47
28 to 39
Marks and Spencer Group plc Annual Report and Financial Statements 202640
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
RISK MANAGEMENT
We operate a structured and
evolving approach to risk
management, recognising
thenature and profile of
riskcontinues to change
asthebusiness, operating
environment and external
context develop.
Ourframework is designed
tosupport informed decision
making and maintain an
appropriate risk culture.
Our risk management process supports
the Board in meeting its responsibilities
under the UK Corporate Governance
Code (the Code). It does so by enabling
consistent identification, assessment
and oversight of the Principal Risks and
Uncertainties that could impact our
strategic objectives, performance
andreputation.
Our framework
The Audit & Risk Committee, acting
under delegated authority from the
Board, is responsible for overseeing
the*effectiveness of our Group risk
management framework. This includes
reviewing the Principal Risks and
Uncertainties facing M&S, monitoring
adherence to the Risk Management
Policy, and considering the ongoing
appropriateness of risk appetite.
Our approach to risk management
The Executive Risk & Compliance
Committee, chaired by the Chief
Financial Officer, supports both the
Executive Committee and the Audit &
Risk Committee in the active management
of risk. It provides executive-level
oversight of key risk themes across the
business and promotes the maintenance
of consistent application of risk
management, control and assurance.
Accountability for managing risk remains
embedded within the M&S operating
model. Individual businesses and functions
are responsible for identifying, assessing
and managing risks relevant to their
activities. These include those arising
from changes in customer demand,
colleague safety andwellbeing, technology
dependency, third-party relationships
and the external environment.
Where risks extend across multiple parts
of the Group, such as operational resilience,
climate-related risks or major change
programmes, oversight is provided
through cross-business committees and
dedicated governance forums.
The Group Risk team facilitate this
activity by working in partnership with
accountable business leadership teams
to support consistent risk identification,
assessment and the maintenance of
appropriate controls.
Risk information is gathered through a
combination of top down and bottom up
processes and it is subject to regular
review and challenge throughout the
year, including as part of interim and
year-end reporting. Following review by
the Executive Risk & Compliance
Committee; the Principal Risks and
Uncertainties are considered by the
Audit & Risk Committee before being
recommended to the Board for approval.
Throughout the year, we have continued
to assess our framework and processes
to ensure they remain appropriate to
respond to the changing needs of the
business. This included providing risk
management support during the cyber
incident; strengthening central oversight
of key group compliance areas through
the Executive Risk & Compliance
Committee; and updating the risk
management process to support
business readiness for upcoming
corporate governance requirements
linked to Provision 29.
The Principal Risks and Uncertainties
identified through this process also inform
our long-term viability assessment
onpage 48.
M&S risk governance structure
Top
down
Bottom
up
Group Risk team
M&S Board
Audit & Risk Committee
Executive Committee
Executive Risk & Compliance
Committee
Business and functional
leadership teams
Process and control owners
Marks and Spencer Group plc Annual Report and Financial Statements 2026 41
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
RISK MANAGEMENT CONTINUED
1
Setting and reviewing
risk appetite
2
Risk identification
andownership
3
Risk assessment
4
Response and actiontracking
5
Monitoring, reporting
andescalation
Who is involved
•
M&S Board
•
Audit & Risk Committee
•
Executive Committee
•
Executive Risk &
ComplianceCommittee
•
Group Risk team
•
Executive Committee
•
Business and functional
leadershipteams
•
Process and control owners
•
Group Risk team
•
Executive Committee
•
Executive Risk &
ComplianceCommittee
•
Business and functional
leadershipteams
•
Group Risk team
•
Executive Committee
•
Executive Risk &
ComplianceCommittee
•
Business and functional
leadershipteams
•
Process and control owners
•
Group Risk team
•
M&S Board
•
Audit & Risk Committee
•
Executive Committee
•
Executive Risk &
ComplianceCommittee
•
Business and functional
leadershipteams
•
Group Risk team
Key activities
•
Our risk appetite statements
articulate the boundaries within
which the business is prepared to
operate, providing clear parameters
to guide decision making.
•
They are reviewed annually, with
input from subject matter experts,
including the Strategy and Legal
teams and members of the
Executive Committee. A full review
is then undertaken with the
Executive Risk & Compliance
Committee, members of the Audit &
Risk Committee and the Chairman.
•
Following this, the risk appetite
statements are formally considered
and approved by the Audit & Risk
Committee, before being
recommended to the Board
forapproval.
•
Dedicated business and functional
risk registers support the visibility,
measurement and reporting of risks.
•
Clear ownership is allocated to
relevant members of the business
and functional leadership teams.
•
This also includes the identification
of emerging risks where the full
extent and implications may not
befully understood but need to
betracked.
•
Risks are assessed using a
consistently applied criteria that
considers both the likelihood of
occurrence and potential impact on
the Group.
•
Each business and function develops
and actively monitors mitigation
plans, which are approved by their
leadership teams and relevant
Executive Committee members.
•
Insights from business and
functional reviews are brought
together to create a cross-Group
view of common and connected
risks. These are reported to the
appropriate governance forums
and inform the Principal Risks and
Uncertainties disclosed externally.
•
The business develops and maintains
plans to mitigate risks to an
appropriate level, in line with
riskappetite.
•
This includes ongoing assessment
and update of risk profiles to reflect
changes, where needed. Challenge
and input are provided by specialist
teams within the business to
support the application of specific
mitigating activities.
•
The Group Risk team overlays this
by independently reviewing and
challenging mitigation plans and
reporting on progress.
•
Business leadership provide direct
updates to the Audit & Risk
Committee on a rolling basis to
confirm appropriate management
of key risks, the effectiveness of
controls and emerging issues.
•
A formal biannual review of risk
registers by the Group Risk team
and other support functions provides
independent challenge and
supports cross-business alignment.
•
These inputs are brought together
to develop an overarching view of
the Group’s Principal Risks and
Uncertainties. This reflects both
internal strategic and operational
developments and external events.
•
Performance is monitored against
risk appetite through a set of metrics.
Outcomes and reporting
•
Refreshed risk appetite statements
aligned with strategy, core
operations, internal and external
compliance requirements, and our
vision, purpose and behaviours.
•
Executive Committee members
provide periodic updates to the
Audit & Risk Committee on
compliance with risk appetite for
their respective business area.
•
Risk registers covering all key areas of the business, including emerging
risklogs.
•
Mitigation plans for risks that are not yet at target level, aligned with
riskappetite.
•
Review and approval of business-level and Group-level risks at the
ExecutiveRisk & Compliance Committee.
•
Periodic reporting to the Executive
Committee to track and monitor
progress against mitigating
actionplans.
•
Direct confirmation to the Audit & Risk
Committee on the management of
key risks by Executive Committee
members for their own areas
andthe Group Risk team at
cross-business level.
•
Principal Risks and Uncertainties
are disclosed in the Annual Report
and Half Year Results.
Our risk management process
Continuous refinement
Marks and Spencer Group plc Annual Report and Financial Statements 202642
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
PRINCIPAL RISKS AND UNCERTAINTIES
Our Principal Risks and Uncertainties have been assessed using the risk framework and
methodology described on the previous page and are closely aligned to our strategic priorities.
Thisalignment highlights how each risk could impact the delivery of our long-term business
objectives and is illustrated at the top of each risk on the following pages, using the key shown
belowthat maps risks to our strategic priorities.
Cyber-security incident and response
At the start of the year, we experienced a
cyber-security incident that resulted in unauthorised
access to parts of the technology environment.
This occurred against a backdrop of increased
cyber crime activity across the retail sector.
Cyber-security remains integral to the Group’s
operations and transformation and the Group
responded promptly by activating established
incident and crisis management arrangements,
supported by external experts. Immediate actions
focused on:
•
Containing the threat.
•
Safeguarding customers and colleagues.
•
Protecting critical systems and data.
•
Enhancing monitoring and detection capabilities
to improve visibility of malicious activity.
•
Strengthening recovery arrangements for the
restoration of services.
A longer-term security enhancement programme
was established, bringing together existing security
improvement activity and incident-driven actions
to strengthen our cyber-security posture.
The programme has executive sponsorship and
ongoing oversight through a number of
governance forums: Security Committee,
Executive Risk & Compliance Committee and Audit
& Risk Committee, as well as the Board.
Cyber-security remains a Principal Risk for the
Group, reflecting the changing external threat
landscape and the complexity of a modern retail
technology environment. Our ongoing risk
mitigations are set out on page 45.
External
An uncertain environment
1
2
3
4
The business continues to operate in a complex external environment, shaped by a range of factors
that could, individually or collectively, negatively impact our performance. These include:
External factors Risk details
Supply chain
disruption
•
Disruption to the supply of materials and products arising from geopolitical
issues, including conflict, trade tariffs or cyber-related events.
•
Significant isolated incidents, such as major infrastructure failures, with
wider global impacts.
•
The consequences of extreme weather events.
•
The impact of animal disease or other epidemics.
These could have direct and immediate operational and financial consequences.
Geopolitical
environment
•
The consequences of global socio-political tensions and fragility,
including ongoing conflicts in the Middle East and Ukraine; growing
tensions in bi-lateral international relations; and cross-border and
domestic policy changes could have a broad systemic influence across
multiple risks.
Cost pressures
•
Impact on margins and pricing strategies due to rising fuel and energy
prices, borrowing costs and low economic growth.
•
Inflation and regulatory-driven cost increases such as minimum wage,
national insurance, business rate increases and other Government levies.
Financial markets
uncertainty
•
The potential risk of global recession.
•
Foreign exchange movements.
•
Volatility of the global financial system.
•
Changes in interest rates.
Impact of increased
regulation
•
Managing the cost and operational impact of increased regulation in areas
such as recycling, packaging, food safety standards and healthy eating.
Health, wellbeing
and consumer
behaviour
Lifestyle changes in consumer behaviour, such as:
•
Increased demand for healthier, more nutritional foods and activewear.
•
Circularity of clothing.
•
The growth of new disruptors in the market.
Mitigations
•
A robust and flexible senior leadership team to focus and respond to a wide range of demands.
•
Enhanced risk processes such as strengthened oversight by the Executive Risk & Compliance Committee.
•
Three-year plan, capital allocation and budgeting processes aligned to our strategic objectives
which are reviewed and adjusted to respond to external uncertainty.
•
Formal operating reviews through Business Boards enabling executive oversight and governance.
•
Well-established business continuity and incident management processes in place.
•
Disciplined focus on consumer trends and improved buying to align cost, range, trusted value
andavailability.
•
Structured supplier engagement to anticipate and support management of business-critical issues.
Oversight by the Board, Executive Committee and Business Boards.
Link to our strategic
priorities:
1
Create exceptional
products
2
Drive profitable
salesgrowth
3
Deliver target
operating margins
4
Build the M&S we
need to be
Risk trajectory:
Stable
Increasing
Decreasing
Evolving
How has our risk profile
evolved this year?
While our Principal Risks and Uncertainties
remain broadly consistent with prior
disclosures, a number of areas continue
toevolve:
•
The external environment remains dynamic,
with geopolitical developments in the
Middle East, political and regulatory
change, cost pressures and the impact of
climate change continuing to influence
our risk profile. However, the business
continues to respond in an agile and
proportionate manner, with actions in
place to support the safety and wellbeing
of customers, colleagues and suppliers,
and to maintain supply chain continuity.
•
Information security remains an area of
heightened focus following the cyber
incident in April 2025. Good progress has
been made to strengthen our control
environment and operational resilience
supported by enhanced governance and
oversight in an evolving threat landscape.
Further details of our response are set
out in the next section.
•
The health and safety of customers,
colleagues and third parties remains a
fundamental priority. To improve clarity
and visibility within our disclosure, we
now capture fire, health and safety risks
within a broader ‘Health, Product Safety
and Integrity’ risk. Previously this was
asubset of Corporate Compliance
andResponsibility.
•
The business continues to monitor a range
of emerging risks as part of our ongoing
risk management activity. Areas we are
currently observing include developments
in artificial intelligence (including Agentic
AI); changes in the UK and international
political landscape; potential future
regulatory developments; and the
longer-term impacts of climate change
onproducts, infrastructure and logistics.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 43
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Link to our strategic priorities:
1
Create exceptional products
2
Drive profitable sales growth
3
Deliver target operating margins
4
Build the M&S we need to be
Risk trajectory
:
Stable
Increasing
Decreasing
Evolving
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Strategic
Business transformation
1
2
3
4
Ongoing business transformation is dependent on our ability to prioritise capital spend and
resources to accelerate and successfully implement the suite of ongoing strategic projects.
Delaysor deferrals of transformation activity could impact the delivery of our medium- and
longer-term growth ambitions.
Significant change activities that underpin our strategy are noted below:
Strategic pillars Transformation activities
Build the M&S we need
to be
•
Enhancing our technology infrastructure, underlying systems and
digital capabilities.
Deliver profitable sales
growth
•
Accelerating the rotation and renewal of our UK store estate.
•
Delivering a compelling online and omnichannel experience.
Improve operating
margins
•
Modernising our supply chain and logistics operations.
•
Transitioning to a structurally lower cost base.
Create exceptional
products
•
Investing in trusted value and innovation to continue maintaining
brand differentiation and relevance.
While each initiative is individually significant and has its own set of inherent risks, the aggregate
impact of simultaneously delivering these challenging projects creates further risks to successful
implementation, such as timeliness of delivery, cost management and achieving returns.
Mitigations
•
Three-year rolling plan, supported by capital allocation and budgeting processes aligned to
strategic objectives which are actively reviewed and flexed as priorities evolve.
•
Continued focus on cost reduction to support investment for growth.
•
Transformation delivery plans supported by clearly defined, leadership-led governance, including
regular operating performance reviews through Business Boards.
•
Application of consistent programme delivery principles, governance and assurance across core
projects, supported by clear accountabilities, milestones and performance monitoring.
•
Refreshed Sparks Programme creating opportunity for greater customer rewards, personalisation
and engagement.
•
Disciplined focus on consumer trends to ensure cost, range, trusted value and availability.
•
Appropriate skills, including external support, sourced for delivering specialist projects.
•
Ongoing review and evolution of our organisational structure and ways of working to drive
improved cost efficiency and effectiveness.
•
Periodic reporting on key business and functional initiatives to the Board and to the
Audit&RiskCommittee.
Oversight by the Board, Executive Committee, Business Boards and, where appropriate,
supportingsub-committees.
Disruption
Business resilience
1
4
A major operational or resilience failure at a key business location, such as one of our distribution
centres or sourcing locations, could result in business interruption. More broadly, being unable to
effectively respond to large, disruptive external events, such as extreme weather or infrastructure
failures could also impact our performance.
Context
Our business remains exposed to a broad range of externally driven events and economic
uncertainties that continue to evolve. This includes:
•
A major incident within our supply chain or logistics operations, including our dedicated
warehouses and distribution centres in the UK or overseas, or at support facilities.
•
Disruption at a sourcing location or with key suppliers where we have built critical dependency,
caused by events such as a natural disaster or civil unrest.
•
Significant incidents or long-term resilience issues at key third parties impacting our operations,
such as cyber-attacks.
•
A major issue impacting one or more of our significant UK or international franchise partnerships.
•
Widespread health events impacting people and/or animals.
•
Prolonged industrial action in the UK or abroad.
Mitigations
•
An established business continuity framework underpinned by a dedicated team, experienced
on-call stakeholders and external expertise.
•
Risk-based business continuity assurance programmes and plans that evolve in response to new
threats for stores, sourcing offices, warehouses, and IT sites.
•
Cyber security enhancement programme in place, with strong governance oversight.
•
Localised business continuity plans in place and periodically tested for high-risk sites.
•
Periodic testing of plans for key scenarios, with support from third parties where needed.
•
Validation of critical suppliers by the Procurement team and periodic risk-based testing by the
Business Continuity team.
•
A digital platform to support the business continuity governance programme and horizon
scanning processes.
•
Active engagement with external organisations, such as the Retail Business Continuity Association
and the National Counter Terrorism Information Exchange.
•
Structured supplier engagement to anticipate and support management of business-critical issues.
Oversight by the Executive Committee, Business Continuity Committee and, where appropriate,
supporting sub-committees.
Marks and Spencer Group plc Annual Report and Financial Statements 202644
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Disruption continued
Information security
1
4
A significant or wide-reaching data breach or cyber incident, as we have experienced, either
directly, or at a key investment or third party. This could result in loss of information and/or
operational disruption impacting our customers, colleagues or the business, and a loss of
confidence in M&S. It could adversely affect our reputation, result in legal exposure, and
potentially cause business disruption if rapid remediation and reset is not possible.
Context
The sophistication and frequency of cyber incidents continue to increase, highlighting the information
security threat to businesses. This continues to be intensified by the threat of cyber incidents linked
to current global uncertainties. The profile of information security and overall threat landscape for
all businesses are changing as a result of:
•
Using data more extensively.
•
Introducing new technology and digital solutions.
•
Hybrid working models.
•
Use of cloud-based storage systems.
Our use of third parties for services and/or hosting data also exposes us to risks from vulnerabilities
in their cyber and data controls.
Mitigations
•
A robust set of information security and data protection policies in place with mandatory training
for colleagues.
•
A dedicated information security function, with multi-disciplinary specialists, incorporating a
24/7/365 Security Operations Centre and active monitoring of our threat environment.
•
A comprehensive set of industry-leading security tooling, incorporating AI capabilities.
•
A dedicated Security Programme delivering enhanced capabilities designed to mitigate the
likelihood and impact of future cyber incidents.
•
Defined and tested incident management plans.
•
Prioritised investment in the people, processes and technologies needed to respond to the
increasing security threat landscape.
•
Risk-based cyber-security assurance programme, giving focused assurance around critical aspects
of our operations, controls framework, and significant change activities, encompassing UK and
overseas locations.
•
A dedicated third-party risk management capability ensuring supply chain risks are identified
andmanaged.
Oversight by the Board, Audit & Risk Committee, Executive Risk & Compliance Committee,
Cyber-Security Committee and Data Protection Committee.
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Critical third parties
Joint ventures, including OcadoRetail,andfranchise
2
3
4
The successful long-term performance of any joint venture is inherently complex due to several factors,
including the ownership and/or operational structure and the need to align different perspectives.
Similarly, the success of our franchise operations is dependent on our ability to work effectively
with both domestic and international partners.
Context
Joint ventures (JVs):
•
The value of our investment in Ocado Retail Limited (ORL), achievement of our multi-channel food
strategy, protection of our brand and delivery of anticipated trading performance are dependent
on maintaining strong strategic and operational relationships with both ORL and Ocado Group.
•
Similarly, although on a smaller scale, the performance of our Indian JV, M&S Reliance (MSR) is
influenced by our ability to maintain strategic alignment and harmonised ways of working with
Reliance Industries.
Franchise:
•
Achieving growth in both our domestic and international markets relies on maintaining effective
working relationships with our franchise partners, protecting our brand and delivering appropriate
returns for both parties.
Mitigations
•
M&S nominated directors form part of the JV boards at ORL and MSR.
•
Joint development of strategic and investment plans directing growth of the businesses.
•
Appropriately aligned operational and people structures to support growth plans. For example,
dedicated JV and franchise support teams coordinating key activities such as sourcing, product
development, pricing, ranging and key compliance requirements.
•
Monitoring of internal audit processes at JVs by the Audit & Risk Committee.
•
Franchise growth strategy aligned with the three-year plan and joint business plans with partners.
•
Assurance programmes covering key risks, such as food safety, across all franchise stores.
•
Annual confirmation from franchise partners on compliance with key requirements.
Oversight by the Ocado Retail Board and Audit Committee, M&S Reliance Board and Audit & Risk
Committee, Food Safety Committee and Group Safety Committee.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 45
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Link to our strategic priorities:
1
Create exceptional products
2
Drive profitable sales growth
3
Deliver target operating margins
4
Build the M&S we need to be
Risk trajectory
:
Stable
Increasing
Decreasing
Evolving
People
Culture, talent and capability
1
4
The success of our business is dependent on being able to attract, retain and develop the right
talent, skills and capabilities. To do this we maintain a clear focus on:
•
Driving a high-performance culture.
•
Meeting the financial and wellbeing expectations of our colleagues.
•
Effectively managing labour cost pressures and regulatory compliance.
•
Working collaboratively with our Business Involvement Group and unions.
Any shortfall in executing against these objectives could impact the delivery of core operational
activities and the longer-term strategy, including aspects of our transformation programme.
Context
We employ over 64,000 talented and passionate people, making us an attractive brand for current
and future colleagues. However, continued focus is needed on:
•
Maintaining a high-performance culture amid significant changes.
•
Managing our investment in competitive pay and benefits for colleagues, alongside the impact of
increasingly complex legislation and the rising costs of employment.
•
Balancing our investment in colleague development and skills for future success with other
business priorities.
•
Navigating a tight labour market in key areas such as technology, digital and artificial intelligence.
•
Adapting to changing colleague expectations and ensuring cultural alignment in areas such as
sustainability, diversity, and ethical values.
Mitigations
•
Continued investment in reward that is externally benchmarked.
•
Investment in internal and external talent to strengthen capability in key roles, develop future
leaders, and drive internal career progression, including an established framework to support
performance, development, progression and succession plans.
•
Creating opportunities through our Early Careers programme and supporting the communities we
operate in, through initiatives such as The King’s Trust and being a gold member of the Armed
Forces Covenant.
•
Delivering improvements in core people management systems and processes to drive consistency
and improve decision making.
•
Embedding consistent standards across the business on assessing, promoting and hiring leaders.
•
Continued focus on driving digital literacy and capability building.
•
A well-established Business Involvement Group which is actively involved in business-wide
colleague engagement and representation at Board meetings.
•
Active monitoring of gender, ethnicity, disability, and age profiles.
•
Store-centric culture, with senior leadership and Support Centre colleagues spending time in stores.
•
Ongoing colleague engagement surveys.
Oversight by the Executive Committee.
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Compliance and responsibility
Health, product safety and integrity
1
As a responsible business, our priority is to maintain safe environments for customers, colleagues
and other third parties, and protect them from potential harm. As well as this, we focus on
preventing and/or ensuring that we respond to all major food or product safety incidents
effectively, including to maintain the integrity of our products.
A failure to do any of these could impact people’s health, safety, confidence in our brand and
business performance.
Context
Ensuring the safety of our people, customers and products, including food and all other product
categories, is crucial for our business. We need to manage potential risks to customer health and
safety and protect consumer confidence and trust by maintaining effective internal processes in our
core business, and at our suppliers and franchises.
We also remain focused on how external pressures on the food, fashion, home and beauty industries
could affect the availability, quality, provenance and integrity of our products. These include: cost pressures
,
animal disease, geopolitical and climate-related events, and cross-border regulatory divergence.
Mitigations
•
Group policies, compliance standards and safety specifications are in place, covering fire, health
and food and product safety, with clearly defined ownership and accountability across the business
and supply chain.
•
Mandatory, role appropriate training is in place for colleagues to support safe working practices
and a safe retail environment.
•
Governance and risk management processes support the safety of colleagues, customers and
products, including risk-based audit and assurance across stores, suppliers, warehouses, JVs and
franchise partners, and monitoring of product quality and customer complaints with corrective
action where required.
•
Incident management processes and response plans are in place to manage and learn from incidents.
•
Regular engagement with expert bodies to understand and respond to changes in safety standards.
•
Third-party brand and supplier contracts include specific provisions covering compliance with
applicable safety requirements.
Oversight by the Group Safety Committee and Food Safety Committee.
Marks and Spencer Group plc Annual Report and Financial Statements 202646
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Climate change and the environment
1
3
4
There is increasing focus and pressure from carbon-conscious stakeholders for the business to
operate in a more environmentally sound and sustainable manner.
Failure to take appropriate actions to reduce the environmental impact of our business over time
and progress towards our net zero targets – those linked to our directly controlled operations and
externally within our supply chain – as well as effectively manage the consequences of climate-related
risks (such as regulations or extreme weather events) could impact our brand, future trading
performance and other business costs, including financing.
Context
We need to monitor and manage both the physical impacts of climate change and the transition risks
associated with the shift to a low-carbon economy. This includes:
•
Availability of raw materials and food products.
•
Locations where we source and operate.
•
The condition of our buildings and the infrastructure required to move product to stores and customers.
•
Management of costs associated with evolving regulatory expectations.
•
Increasing expectations to demonstrate credible climate action.
Future performance depends on our ability to transition to a low-carbon economy by:
•
Balancing business decisions with environmental responsibility and regulations.
•
Adapting to growth in the circular economy, waste reduction, low-carbon products and sustainable
and recycled fabrics.
•
Responding to new regulatory measures while effectively managing the associated costs.
Mitigations
•
Established Plan A programme with clear accountabilities in each area of the business and robust
assurance processes.
•
Science-based targets agreed by the Board and validated by the Science Based Targets initiative (SBTi).
•
Established policies and standards covering product and raw materials, clothing quality and
environment impact which are also shared with suppliers.
•
Awareness training in place for colleagues.
•
Experienced ESG team members, with experts embedded in key areas and decision making.
•
An established governance structure to oversee the delivery of our carbon commitments and
ESGrisks.
•
Engagement and planning with partners and suppliers to support their decarbonisation activities.
•
Proactive engagement with Government bodies and industry experts.
Oversight by the ESG Committee.
Compliance and responsibility continued
Corporate compliance
1
2
3
4
A failure to consistently deliver against an increasingly demanding set of legal and regulatory
obligations or broader corporate responsibility commitments could undermine our reputation as a
responsible retailer.
The consequences of failing to meet these obligations may include a loss of trust by customers,
colleagues, investors and other stakeholders and/or legal exposure, regulatory sanctions,
operational constraints, financial losses, and potential harm to people or the environment.
Context
An increasing number of legal and regulatory requirements is putting pressure on businesses across
the industry, impacting the cost of compliance and operational efficiency. This includes:
•
Responding to regulatory changes, such as those impacting packaging or corporate governance
standards more generally.
•
Dealing with diverging regulations across countries, especially in the EU.
•
Navigating external economic challenges, which heighten the risk of mishandling ethical and social
responsibilities, especially through supply chains.
Non-compliance may result in fines; criminal prosecution for M&S and/or colleagues; litigation
requiring investment to rectify breaches; and disruption or cessation of business activity and brand
and reputational impacts.
Mitigations
•
Code of Conduct in place, underpinned by policies and procedures in core areas.
•
Enhanced risk processes with oversight by the Executive Risk & Compliance Committee.
•
Mandatory training programmes for high-risk areas such as safety, information security,
competition law, data privacy, fraud and anti-bribery and corruption.
•
Established in-house Legal team with dedicated subject area leaders and regulatory expertise,
supported by external advisers where necessary.
•
Mandatory Global Sourcing Principles set and shared with our supply base and other third parties.
•
Dedicated Group Data Protection team and a network of Data Compliance Managers.
•
Assurance and monitoring systems covering legal, regulatory, ethical, and social considerations.
•
A confidential reporting line allowing colleagues and other stakeholders to raise concerns.
•
Worker voice programme in the Food business and transparency initiatives within Fashion, Home & Beauty.
•
Active monitoring of customer feedback and public sentiment on compliance and responsibility.
•
Proactive engagement with regulators, legislators, trade bodies, and policy makers.
Oversight by the Board, ESGCommittee, Executive Committee, Executive Risk & Compliance
Committee and Data Protection Committee.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 47
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
OUR APPROACH TO ASSESSING LONG-TERM VIABILITY
The UK Corporate Governance Code
requires us to issue a ‘viability statement’
declaring whether we believe the Group
can continue to operate and meet its
liabilities, considering its current position
and principal risks. The overriding aim is
to encourage directors to focus on the
longer term and to be more actively
involved in risk management and internal
controls. In assessing viability, the Board
considered several key factors, including
our business model (see page 5), our
strategy (see pages 10 to 14), our
approach to risk management (see
pages 41 to 42) and our principal risks
and uncertainties (see pages 43 to 47).
The Board is required to assess the
Group’s viability over a period greater
than 12 months, and in keeping with the
way that the Board views the development
of our business over the long term, a
period of three years is considered
appropriate for business planning,
measuring performance and
remunerating at a senior level. This
three-year period aligns to the Group’s
annual strategic review exercise conducted
within the business and reviewed by the
Board and captures a large proportion of
the Group’s investment into its ongoing
transformation programme as well as
the maturity of its July 2027, February 2033
and December 2037 bonds.
The Group continues to maintain a
robust financial position with available
liquidity of £1.9bn, including cash and
cash equivalents of £997.2m and access
to a committed revolving credit facility
(RCF) of £850.0m which expires in
December 2030. The facility contains a
financial covenant, being the ratio of
earnings before interest, tax, depreciation
and amortisation; to net interest and
depreciation on right-of-use assets
under IFRS 16. The covenant is measured
semi-annually.
For the purpose of assessing the Group’s
viability, the Board identified that, although
all of the principal risks detailed on
pages 43 to 47 could have an impact on
Group performance, the following risks
pose the greatest threat to the business
model, future performance, solvency
and liquidity of the Group and are
therefore the most important to the
assessment of the viability of the Group:
•
An uncertain environment.
•
Business transformation.
•
Joint ventures, including Ocado Retail
and franchise.
•
Culture, talent and capability.
In assessing viability, the Board considered
the position presented in the approved
Budget and Three-Year Plan. The process
adopted to prepare the financial model
for assessing the viability of the Group
involved collaborative input from several
functions across the business to model a
severe but plausible downside scenario.
The severe but plausible downside scenario
includes the following assumptions:
•
A period of economic recession in
2026/27, resulting in a reduction in
sales growth of 3.0-5.0% across all
three business units compared to the
Budget and Three-Year Plan.
•
A delay on transformation benefits,
which reduces the incremental sales
expected from the transformation by
7.5%, 15% and 30% respectively across
the three-year period.
•
Ocado Retail Limited experiences
limited customer demand, with a 5.0%
reduction in volume growth each year
across the three-year period compared
to the Budget and Three-Year Plan.
The Board has also considered the potential
impact of changes to environmental
factors which may affect the business
model and performance in the future.
Asset out in the Task Force on Climate-
related Financial Disclosures (TCFD)
section on pages 28 to 39, no material
impact on the Group’s financial
performance is considered to exist in
theshort term.
The impact of the severe but plausible
downside scenario has been reviewed
against the Group’s projected cash flow
position and financial covenant over the
three-year viability period. In the event
of this scenario materialising, mitigating
actions would be available, including,
but not limited to, deferring or cancelling
discretionary spend (including discretionary
bonuses), reducing returns to shareholders
and reducing capital expenditure.
As a result, even under this scenario,
which the Board considers to reflect a
severe, but plausible, outcome, the
Group would continue to have sufficient
liquidity and headroom on its existing
facilities and meet the measurement
criteria against the RCF’s financial
covenant. The Audit & Risk Committee
reviews the output of the viability
assessment in advance of final
evaluation by the Board. The Board has
also satisfied itself that it has the
evidence necessary to support the
statement in terms of the effectiveness
of the internal control environment in
place to mitigate risk.
Reverse stress testing has also been
applied to the model to determine the
decline in profitability that the Group
could absorb before exhausting the
Group’s total liquidity. Such a scenario,
and the sequence of events which could
lead to it, is considered to be extremely
remote, as it requires EBITDA reductions
of more than 46% per annum over the
three-year assessment period compared
to the Budget and Three-Year Plan
before total liquidity is exhausted.
Further, it only includes very limited
mitigations, comprising the removal of
bonus, utilisation of centrally held
contingency, removal of dividends and a
modest reduction in growth capital
expenditure. While the occurrence of
one or more of the principal risks has the
potential to affect future performance,
none of them are considered likely either
individually or collectively to give rise to
a trading deterioration of the magnitude
indicated by the reverse stress testing
and to threaten the viability of the Group
over the three-year assessment period.
Having reviewed the current
performance, forecasts, debt servicing
requirements, total facilities and current
liquidity, the Board expects the Group to
have adequate resources to continue in
operation, meet its liabilities as they fall
due, retain sufficient available cash
across all three years of the assessment
period and not breach the covenant
under the RCF. The Board therefore
expects the Group will remain
commercially viable and the viability
statement can be found on page 97.
Stuart Machin
Chief Executive Officer
19 May 2026
Marks and Spencer Group plc Annual Report and Financial Statements 202648
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
GOVERNANCE OVERVIEW
The Governance section that follows
isaconcise summary of the Board’s role,
activities and considerations. More
information about our Board, its
Committees and our governance
framework is available at
corporate.marksandspencer.com.
Transformation
While staying close to the business’
response to the cyber incident and
overseeing recovery plans, the Board
maintained oversight of our overall
transformation. Recurring areas of focus
for the Board included transforming
stores and the online experience,
improving supply chains and delivering
structural cost reductions. More information
on the Board’s activities and key
decisions follows on pages 53 to 54.
Board changes
Two new Non-Executive Directors, Roger
Burnley and Sean Doyle, joined the Board
in December 2025 following Justin King
and Ronan Dunne’s departures. More
information on their appointment and
induction process is on page 56.
Dividend
We announced in May 2026 that we
propose to pay a final dividend of 3.0p
per share. This, combined with the
interim dividend paid in January 2026,
means the Company will have paid a
total dividend of 4.2p for 2025/26.
Board gender
60%
40%
Female
Male
25/26
60%
40%
Female
Male
24/25
Executive Committee gender*
30%
70%
Female
Male
25/26
40%
60%
Female
Male
24/25
Board ethnicity
10%
90%
White
25/26
Ethnic minority
10%
90%
White
24/25
Ethnic minority
Executive Committee ethnicity*
10%
90%
White
25/26
Ethnic minority
10%
90%
White
24/25
Ethnic minority
Board and Executive
Committee diversity
Gender identity and ethnicity data
required to be disclosed in accordance
with UKLR 6.6.6R (10) can be found on
page 94.
Compliance with the UK Corporate Governance Code2024
The UK Corporate Governance Code 2024 (the Code) (available at frc.org.uk) is the
standard against which we measured ourselves in 2025/26. The Board confirms that
M&S complied with the provisions set out in the Code for the period under review.
Details on how we applied the Code’s principles, readiness activities for compliance
with the new Provision 29 (which will apply from next year’s Annual Report), and how
governance operates at M&S, can be found throughout this Governance section and
elsewhere in this Annual Report as detailed below.
1.
Board leadership and
companypurpose
Page(s)
A. Effective board 50-52
B. Purpose, values and culture
5-9,
25-26
C. Governance framework
50
D. Stakeholder engagement
6-9,
53-54, 81
E.
Workforce policies
andpractices
25-26
2. Division of responsibilities
F. Role of chair 50
G. Independence 55
H.
External commitments and
conflicts of interest
51-52
I. Board resources 50
3.
Composition, succession
andevaluation
Page(s)
J. Appointment to the board 56-57
K.
Board skills, experience
andknowledge
51-52,57
L. Annual board evaluation 55
4.
Audit, risk and internal control
M.
External and internal audit
functions
64-65
N.
Fair, balanced and
understandable review
61
O.
Internal financial controls
andrisk management
60-64,
41-42
5.
Remuneration
P.
Linking remuneration to
purpose and strategy
66-68,
70-79,
83-87
Q. Remuneration policy review 71-80, 92
R.
Performance outcomes in
2025/26
67-68,
81-87
Our full Corporate Governance Statement
isavailable online at corporate.
marksandspencer.com/about-us/corporate-
governance.
Digital-first Annual Report
Reflecting our commitment to a
digital-first approach, we have moved
additional content for this year’s Annual
Report to a dedicated, interactive ‘Year
in Review’ section on our corporate
website at corporate.marksandspencer.
com/annualreport2026.
Here, case studies, videos and deeper
insights can be found, providing a more
dynamic way for readers and viewers to
explore our performance and activities
throughout the year.
* Information correct at 1 June 2026.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 49
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
OUR GOVERNANCE FRAMEWORK
Our framework enables agile and effective decision making, whileensuring we have
established and robust governance practices in place.
Board Committees
The Board delegates certain matters to its four main Committees. The Committee
Chairs regularly update the Board on their respective Committee’s activities. More
information on meeting attendance, Committee members, and their skills and
experience can be found on pages 51 to 52 and 57.
See our Board Committee roles and the full Terms of Reference for each at
corporate.marksandspencer.com/about-us/corporate-governance.
Board of
Directors
The Board is responsible
for setting M&S’ strategy
and ensuring the Company
has a clear vision, purpose
and culture to achieve this.
It oversees our conduct
and operations to ensure
we deliver long-term value
for the benefit of M&S’
shareholders and broader
stakeholders.
Board roles
Our Board is comprised of
thefollowing:
•
Chairman
•
Chief Executive Officer
(CEO)
•
Chief Financial Officer
(CFO)
•
Senior Independent
Director (SID)
•
Non-Executive Directors
(NEDs)
A full breakdown of the Board’s
roles and responsibilities
is available at corporate.
marksandspencer.com/about-
us/corporate-governance.
Executive
Committee
The Executive Committee
(ExCo) is our internal
leadership team established
and led by the CEO. It is
responsible for delivering the
M&S strategy and the day-to-
day management of the
business. ExCo members
provide updates at Board
meetings and maintain regular
dialogue with the Board to
facilitate support and receive
constructive challenge.
See our ExCo members and their
biographies at corporate.
marksandspencer.com.
Senior Management Forums
Our Senior Management Forums support specific business
needs or strategic priorities, meeting as and when required.
These include:
•
Shares & Dealing Committee
•
Disclosure & Oversight Committee
•
Property Committee
•
Executive Risk & Compliance Committee
•
ESG Business Forum
•
Data Protection Committee
Business Boards
Our Business Boards oversee the day-to-day running of
our key business units.
These include:
•
Food
•
Fashion, Home & Beauty
•
International
•
Digital & Technology
•
Stores
•
Property & Renewal
Nomination
Committee
ESG
Committee
Audit & Risk
Committee
Remuneration
Committee
Marks and Spencer Group plc Annual Report and Financial Statements 202650
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Committee ChairsChair and Executive Directors
Archie Norman
Chairman
N
R
Appointed: September 2017
Current appointments:
•
Senior Independent
Director of Bridgepoint
Group plc.
•
Chairman of M Group.
Prior experience:
•
Experienced Chairman
and former Chief
Executive having led
major transformation
programmes at ITV,
Lazard, Asda and Energis.
•
Lead Director at the
Department for Business,
Energy & Industrial
Strategy from 2016–2020.
•
Deputy Chairman of
Coles Limited.
•
Only FTSE 100 Chairman
to be elected as a Member
of Parliament.
Meeting attendance:
•
Board (11/11)
•
Audit & Risk Committee
(5/5)*
•
ESG Committee (4/4)*
•
Nomination Committee
(3/3)
•
Remuneration Committee
(5/5)
Stuart Machin
Chief Executive
Officer
Alison Dolan
Chief Financial
Officer
Appointed: May 2022
Current appointments:
•
Director of M&S’ JV with
Ocado, Ocado Retail
Limited.
Prior experience:
•
M&S Food MD and
jointCOO.
•
CEO of Steinhoff UK.
•
Senior roles at
Wesfarmers, as CEO of
Target Australia and COO
of Coles Supermarkets.
•
Various leadership roles
at Sainsbury’s, British
Home Stores, Tesco
andAsda.
•
Extensive experience of
delivering retail
transformation and a
deep understanding of
operations, trading,
marketing and online.
Meeting attendance:
•
Board (11/11)
•
Remuneration Committee
(2/2)*
Appointed: January 2025
Current appointments:
•
Director of M&S’ JV with
Ocado, Ocado Retail
Limited.
•
Non-Executive Director
ofPearson plc.
Prior experience:
•
CFO of Rightmove plc.
•
Senior finance roles at
Skyplc, including at
SkyTechnology and
SkyBusiness.
•
Extensive commercial and
operational finance
experience, particularly
within digital businesses.
Meeting attendance:
•
Board (11/11)
•
Audit & Risk Committee
(5/5)*
Fiona Dawson
Senior Independent
Director
R
N
Appointed: May 2021
Current appointments:
•
Chair of Kerry Group plc.
•
Non-Executive Director
and Chair of the
Remuneration Committee
of Reckitt Benckiser
Group plc.
•
Trustee of The Social
Mobility Foundation.
•
President of the
Chartered Management
Institute.
Prior experience:
•
Over 30 years at Mars Inc.,
latterly as Global
President Food, Multisales
and Global Customers
and a member of the
Global Leadership Team.
•
Non-Executive Director
ofLEGO.
•
Chair of the Women’s
Business Council.
•
President of the Institute
ofGrocery Distribution and
Vice President of the Food
and Drink Federation.
Meeting attendance:
•
Board (11/11)
•
Nomination Committee
(3/3)
•
Remuneration Committee
(5/5)
Evelyn Bourke
Non-Executive
Director
Tamara Ingram
Non-Executive
Director
A
N
Appointed: February 2021
Current appointments:
•
Non-Executive Director
ofAdmiral plc.
•
Non-Executive Director
ofSt James’s Place plc.
•
Chair of the UK Board
ofGenesisCare and
Non-Executive Director
ofGenesisCare Cayman.
Prior experience:
•
Non-Executive Director of
the Bank of Ireland.
•
Senior Independent
Director of AJ Bell plc.
•
CEO and CFO of Bupa
Group.
•
Leadership roles at
Standard Life and Friends
Provident.
•
Extensive experience in
financial services.
Meeting attendance:
•
Board (11/11)
•
Audit & Risk Committee
(5/5)^
•
Nomination Committee
(3/3)
E
R
N
Appointed: June 2020
Current appointments:
•
Non-Executive Director
ofReckitt Benckiser
Group plc.
•
Non-Executive Director
ofMarsh.
•
Non-Executive Director
ofIntertek Group.
•
Deputy Chair of Ofcom.
Prior experience:
•
Held leadership roles at
WPP since 2002, including
as Non-Executive Chair of
Wunderman Thompson
and CEO of J Walter
Thompson.
•
Held the roles of CEO and
Chair at Saatchi and
Saatchi.
•
Led renowned marketing
campaigns for household
brands around the world
and delivered cultural and
business transformation
at pace within her own
businesses as well as on
behalf of clients.
Meeting attendance:
•
Board (11/11)
•
ESG Committee (4/4)
•
Nomination Committee
(3/3)
•
Remuneration Committee
(5/5)
OUR BOARD
Committee key:
A
Audit & Risk
E
ESG
N
Nomination
R
Remuneration Committee Chair
Marks and Spencer Group plc Annual Report and Financial Statements 2026 51
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Non-Executive Directors
General Counsel &
Company Secretary
Nick Folland
Appointed: February 2019
Nick Folland has extensive legal and governance
experience, having been General Counsel & Company
Secretary inFTSE 100 businesses since 2001, originally
qualifying asasolicitor at Linklaters and Paines in 1993.
Meeting attendance:
•
Board (11/11)
•
Audit & Risk Committee (5/5)*
•
Remuneration Committee (5/5)*
Leavers this year
Justin King stood down from the Board with effect
from10September 2025, having been a Non-Executive
Director since January 2019.
Ronan Dunne stood down from the Board with effect
from1 December 2025. Ronan joined our Board as
Non-Executive Director in August 2022.
Sapna Sood
Non-Executive
Director
E
N
Appointed: June 2020
Current appointments:
•
President, Adecco APAC.
Prior experience:
•
Chief of Staff to the Group
CEO at Adecco.
•
Senior executive at
Compass Group.
•
Non-Executive Director
atKering SA.
•
In-depth knowledge of
running complex supply
chains, including in food
and clothing.
•
Experience of leading
large transformation
programmes.
Meeting attendance:
•
Board (10/11)**
•
ESG Committee (4/4)
•
Nomination Committee
(3/3)
Cheryl Potter
Non-Executive
Director (Outgoing)
E
N
Appointed: March 2023
Current appointments:
•
Board member (former
Chair) of Level 20, a
not-for-profit focused on
getting more women into
senior investing roles in
the Private Equity industry.
•
Founding Patron of
ThePrince’s Trust Women
Supporting Women scheme.
Prior experience:
•
Former head of the global
consumer team at private
equity firm Permira.
Meeting attendance:
•
Board (11/11)
•
ESG Committee (3/4)**
•
Nomination Committee
(3/3)
Cheryl will be standing down
at the 2026 AGM, having
served over three years on
the Board.
OUR BOARD CONTINUED
* Attended by standing invite.
** Unable to attend due to prior business commitments.
^ Has recent and relevant financial experience.
More information on the Board’s skillset can be
found on page 57.
Full biographies can be
found at: corporate.
marksandspencer.com/
about-us/our-
leadership.
Roger Burnley
Non-Executive
Director
A
N
Appointed: December 2025
Current appointments:
•
Non-Executive Director
and Chair of the
Remuneration Committee
of Pets at Home plc.
Prior experience:
•
Executive Director
ofSainsbury’s.
•
Chief Operating Officer
and CEO of Asda.
•
Non-Executive Chair of
Finnebrogue Artisan.
•
Chair of Plate-up Limited.
Meeting attendance:
•
Board (2/4)**
•
Audit & Risk Committee
(1/2)**
•
Nomination Committee
(1/2)**
Sean Doyle
Non-Executive
Director
A
N
Appointed: December 2025
Current appointments:
•
Chief Executive and
Chairman of British Airways.
•
Vice Chair of
BritishAmerican Business.
•
Director of The Ireland
Fund of Great Britain.
•
Member of the leadership
council of Business In The
Community (BITC), and the
Government’s Aviation
Futures Forum.
Prior experience:
•
Chief Executive of
AerLingus.
Meeting attendance:
•
Board (4/4)
•
Audit & Risk Committee
(2/2)
•
Nomination Committee
(2/2)
Marks and Spencer Group plc Annual Report and Financial Statements 202652
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
BOARD ACTIVITIES
The following pages outline the Board’s
key areas of focus during the year. Meeting
agendas, agreed in advance bythe
Chairman, CEO and Company Secretary,
balance regularstanding items. These
include strategy and transformation,
deep dives, executive updates and
governance and Committeereports.
People and culture is embedded
throughout these regular agenda items,
as was digital and technology following
the cyber incident at the start of the year.
On the Board’s agenda in
2025/26
Strategy and transformation
The Board considered key areas of strategy and progress
made by each business unit towards delivering plans to
reshape M&S for growth, advising on direction of travel
and areas of focus. This year, the Board used these
sessions to oversee transformation progress, reviewing
the long-term vision of M&S.
At its two away days held during the year, the Board
evaluated and challenged our key transformation
programmes including:
•
Reshaping FH&B in both retail and online channels
byestablishing a truly omnichannel business and
transforming the end-to-end supply chain network.
•
Unlocking our ambition of doubling the size of the
Food business through investment in stores, technology,
and building a sustainable and resilient Food
supplybase.
•
Building a global brand through the reset of our
partnerships model across International markets,
andcreating demand with new wholesale partners.
•
Resetting the Digital & Technology Transformation
Programme post-cyber incident.
Executive updates
Operational and financial updates: Received
monthlyupdates from the CEO and CFO, summarising
key challenges and activity during the month, and
lookingforward to upcoming priorities. These included
consideration of headwinds and macroeconomic events
facing the business, and any necessary responses.
Capital returns: Reviewed the approach to dividends,
paying consideration to our disciplined capital
allocation policy.
Debt management: Approved the bond maturity
management exercise, resulting in the redemption and
buyback of c.£302m bonds. These were replaced with
an issue of £300m longer-term bonds to further
strengthen our balance sheet.
UK budget: Discussed the impact of the budget on M&S,
highlighting the cost challenges for retail businesses.
People and culture
The Board engaged with people and culture matters
throughout the year, ensuring colleagues remained
central to long-term decision making.
The Board reviewed responses to biannual colleague
engagement surveys and discussed possible actions to
further embed M&S’ culture and behaviours across the
business. Responses to surveys were tracked during the
year, and actions to address were discussed and agreed
with ExCo.
The National BIG Chair joined meetings to share regular
updates. These included the impact of the cyber incident
on colleague communication channels and the response
in store to the relaunch of the ‘M&S Way’. Read more on
the M&S Way on page 7.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 53
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
BOARD ACTIVITIES CONTINUED
On the Board’s agenda in
2025/26 continued
Governance and Committee reports
Committee updates: Received updates from
Committee Chairs on their Committee meetings,
highlighting any decisions and key issues for the
Board’s attention.
Legal and governance: Received monthly updates from
the General Counsel & Company Secretary. These gave
an overview of legal and governance activities from the
period and highlighted upcoming changes to law
orregulation.
Approval: Considered contracts for approval beyond
the business’ delegated authorities. Also considered
the year-end statutory reporting for publication.
Approval: Full Year Results for 2024/25 and
recommendation of a final dividend of 2.6p.
Event: Annual General Meeting 2025.
Approval: Half Year Results for 2025/26 and
recommendation of an interim dividend of 1.2p.
Event: Capital Markets Day with investors, presenting
long-term growth opportunities across the Food,
FH&Band International businesses. See page 7
forfurtherdetails.
Digital & Technology and recovery
The Board’s year began with its focus centred on
assessing the early impact of the cyber incident and
identifying first steps towards recovery. Additional
meetings and calls were held frequently to understand
the evolving situation in the immediate aftermath. The
Board also held regular feedback sessions with the
Operations Director and Technology team to monitor
the incident response and systems recovery.
Ahead of the Christmas peak trading period,
discussions moved to defining priorities for key
systems resilience to ensure strong performance.
Focus later shifted to remapping the Digital & Technology
Transformation Programme in light of the post-cyber
incident acceleration, and then ensuring progress
remained in line with plan.
How the directors fulfil their s.172 duty:
•
The Board’s diverse skills and experience
enable informed decision making that
promotes long-term success while considering
stakeholder needs. More detail on Board
composition, including the skills and
experience of our directors, is on pages
51to52 and 57.
•
The Board receives detailed papers and updates
from management which are challenged and
debated to consider differing stakeholder
views. Progress updates from management
allow the Board to review and adjust plans as
situations evolve. A summary of the Board’s
activities this year is on pages 53 to 54.
•
Directors constructively challenge and
contribute to discussions, offering perspectives,
advice and strategic guidance.
•
The Board sets the strategic direction, values
and culture of the Company, ensuring
stakeholder considerations are central to
decision making. More information about our
culture is on pages 25 to 26, and our strategy on
pages 10 to 14.
•
Engagement helps directors understand
stakeholder needs and make informed
decisions. Highlights of Board engagement this
year include:
–
Retail leadership dinners to hear insight on
store operations and the cyber incident’s
impact on ways of working.
–
Visits to stores, suppliers and distribution
centres to hear directly from teams on
theground.
–
Meetings with the Chair of our National
Business Involvement Group (BIG) to
deep-dive into our colleague engagement
network, from store to Board level.
Read our s.172 statement on pages 6 to 9.
Marks and Spencer Group plc Annual Report and Financial Statements 202654
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
BOARD REVIEW
This year’s Board review was carried out internally, led by the Chairman with support
from the General Counsel & Company Secretary. The evaluation comprised individual
conversations with each director to discuss reflections and identify potential opportunities.
The review considered the following:
•
Board: composition, breadth of capabilities and expertise, effectiveness of
dynamics, allocation and use of meeting time, consideration of stakeholder
interests, and strength of strategic oversight.
•
Committees: performance of each Committee, considering the quality of agendas
and the appropriateness of Committee composition.
•
Chairman: effectiveness of communication and engagement with the Board and
ExCo, the leadership and conduct of Board meetings, tenure, and interaction
withshareholders.
•
Individual directors: availability and time commitment, readiness for meetings,
collaborative working relationships, professional expertise, overall contribution to
the Board, and new director appointments, inductions and how each has settled in.
The last external evaluation took place in 2023/24; therefore, the 2026/27 Board review
will be externally facilitated in accordance with the UK Corporate Governance Code.
Progress made against 2025/26 actions
Progress in addressing actions highlighted in last year’s review is summarised below.
Action Progress
Consider the Board’s composition, shifting
focus from short-term succession needs to a
longer-term view, evolving the Board’s expertise
for the business’ future strategic priorities.
Directors carried out a search and selection
process, resulting in the appointments of
Roger Burnley and Sean Doyle to the Board.
Additionally, following an extensive
consultation process led by the SID, the NEDs
agreed to extend Archie Norman’s tenure by a
further three years to ensure continuity for the
business’ Reshaping for Growth plan.
Find more information about the
Nomination Committee’s activities on pages
56 to 57.
Guide ExCo as it establishes itself with new
members, offering constructive challenge and
feedback as necessary to support its
development, as well as its delivery of the
strategy and transformation programmes.
The Board mentorship programme was
enhanced and refreshed during the year,
embedding new Board and ExCo members. Each
ExCo member is paired with a NED, providing
structured guidance, regular feedback and
strengthened support, as ExCo continues to
deliver on strategic and transformation priorities.
NEDs to maintain their high levels of
engagement, strengthening relationships with
key stakeholders across the business to stay
attuned to their changing needs.
Directors broadened their stakeholder
relationships and gained greater visibility of
the business’ key operational activities, while
new NEDs participated in induction activities,
introducing them to key stakeholders.
More information on engagement is on
pages 6 to 9 and 54. More information on
NED inductions is on page 56.
Review insights and action plan for 2026/27
This year’s review found that directors maintained a high level of engagement with
the business. The review confirmed the Board and its Committees continued to
function effectively, delivering appropriate oversight and constructive challenge.
This included close scrutiny of the challenges encountered during the year following
the cyber incident and the Company’s recovery actions, as well as continued
emphasis on long-term priorities and the progression of transformation initiatives.
Following the review, the key actions proposed for implementation in the next year are:
•
Continue to consider Board composition and evolution, remaining focused on the
skills and expertise required for the business’ future strategic priorities.
•
Maintain high levels of engagement with ExCo and business stakeholders,
maximising opportunities for support and challenge, particularly on delivery of
strategy and transformation programmes.
Time commitments
The Board recognises the importance
of directors committing adequate time
to their roles. Following a review of
external appointments, the Board
wassatisfied that each director has
sufficient capacity to meet the
Company’s requirements. Their active
contributions in meetings reflect the
time they dedicate to M&S matters
outside the boardroom, and they
remain available for additional,
unscheduled commitments when
required. This was demonstrated during
the year by the Board’s involvement
inresponse to the cyber incident and
oversight of recovery plans, which
required additional time and
engagement beyond the usual
meetingschedule.
Board tenure
As part of the review, the tenure
and independence of each
director were assessed. All
NEDs remain within the
recommended nine-year tenure
limit, and the Board concluded
that each continues to
demonstrate independence.
The Chairman’s tenure will
exceed nine years in September
2026. After extensive
consultation with shareholders,
executives and advisers, the
NEDs, led by the SID, decided
to extend the Chairman’s
tenure for a further three years.
More information is in the
Nomination Committee Report
on page 56.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 55
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOMINATION COMMITTEE REPORT
Committee role,
responsibilities,
membership and
effectiveness
The Committee is responsible for
reviewing Board and Committee
structure, composition and
diversity, and overseeing the
process for nomination, induction
and evaluation of directors. The
Committee also monitors the
Company’s leadership and
succession needs, ensuring the
Board’s skills and experience
remain suited to the successful
execution of our strategy.
The full Terms of Reference for the
Committee can be found at
corporate.marksandspencer.com.
Details of Committee members
during the year and their attendance
at all meetings are on pages 51 to 52.
Information on the skills and
experience of all Committee
members is on pages 51to 52 and 57.
Details of the Committee’s annual
performance review are onpage 55.
On the Committee’s
agenda in 2025/26
Non-Executive Director
appointments
The Committee regularly reviews the
composition, structure and diversity of
the Board and, using a skills matrix like
the one on page 57, considers what
might be required as M&S progresses
with its Reshaping for Growth plans.
Following recent departures from the
Board, and looking at the next phase of
M&S’ transformation, the Committee
commenced a search to appoint two new
non-executive directors. It was agreed
ideal candidates would possess a
background in customer-first
businesses, with relevant and proven
retail and leadership experience. The
appointment and induction process for
these candidates is outlined below.
Appointment and induction
1 – Identification of candidates
Engaged executive recruitment consultants
Russell Reynolds Associates (RRA) and MBS Group*,
providing the approved candidate brief which
included the skills and expertise identified above.
A longlist of candidates was shared with the
Committee from which a shortlist was drawn up.
Shortlisted candidates were contacted to
establish interest.
2 – Interview process
Members of the Committee met with shortlisted
candidates to assess their alignment to the
briefand determine whether their specific skills
and experience would be additive to the Board
asa whole.
3 – Appointments
The Committee agreed that both Roger Burnley
and Sean Doyle were the best candidates and they
were recommended for appointment to the Board.
* RRA and MBS Group have no connection
totheCompany or its directors.
4 – Induction programme
Tailored induction programmes for Roger and
Sean took place after their appointment, which
included:
•
Meeting with the Chair of the Audit & Risk
Committee, as proposed incoming
Committeemembers.
•
Introductions to key business unit leadership
teams across Fashion, Home & Beauty, Food,
Property, Retail and International.
•
Receiving a comprehensive pre-read of Board
and relevant Committee papers from the
previous 12 months.
•
Meeting with the General Counsel & Company
Secretary, for a reminder of UK listed company
and corporate governance requirements.
•
Introductions to key external stakeholders,
including the external audit partner.
Roger and Sean, like the rest of our Board, also
visited stores and distribution centres across
thecountry.
The Committee will continue to consider
Board composition and evolution into
2026/27 as a key action proposed by the
Board’s review (details on page 55).
Togive it renewed focus, the Committee’s
membership has been reviewed and,
effective from June 2026, it will comprise
the Chairman (remaining as the Committee’s
Chair), Fiona Dawson and Evelyn Bourke.
Chairman
As announced in October 2025, the
Committee (excluding the Committee
Chair) carefully considered and agreed
to extend the Chairman’s term by three
years, subject to annual review. Inreaching
this decision, the Committee was mindful
of the Code’s provision regarding a
Chair’s tenure, given this willreach nine
years in September 2026.
Before making its recommendation,
asub-group of the Committee was
established to undertake a rigorous
review of Archie’s continued appointment,
chaired by the SID and in regular dialogue
with all Board members. As part of the
review, extensive consultation took place
with key stakeholders, including with
shareholders representing c.30% of issued
share capital. The Committee and the
Board noted strong shareholder support
was expressed for the Chairman’s continued
appointment. Thereview also noted the
importance of continuity, with execution
of the business’ long-term transformation
ongoing, and in the aftermath of the cyber
incident. The review concluded by
agreeing that extending Archie’s term by
three years, subject to comprehensive
annual review by the sub-group of the
Committee, was in the best interests of
the Company and its stakeholders. The
Board is therefore recommending his
re-election at the forthcoming AGM
on7July 2026.
Executive Committee
succession planning
The Committee continued to oversee
the succession of ExCoand senior
management, with regular reviews to
ensure key roles continued to support
our Reshaping for Growth strategy.
Thinus Keeve joined the business as
Retail Director in June 2025, dedicated
to simplifying store processes and
driving consistency across the estate.
Hayley Tatum joined as Chief People
Officer in October 2025, focused on
accelerating the pace of change across
our people plans and further embedding
our high-performance culture.
Marks and Spencer Group plc Annual Report and Financial Statements 202656
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOMINATION COMMITTEE REPORT CONTINUED
Diversity, equity and inclusion
The Board’s Diversity & Inclusion Policy, which extends to its Committees, outlines the Board’s targets and considers the FCA Listing Rules, the FTSE Women Leaders Review,
and the Parker Review, all with the aim of supporting a sustainable and diverse talent pipeline.
As at 28 March 2026, the Board met each of the targets as set under UKLR 6.6.6R (9).
Board Diversity & Inclusion Policy objectives Implementation Progress
Maintain a continuous level of at least 40%
female directors on the M&S Group plc Board.
Succession planning reviews evaluate the Board’s capabilities to ensure they support
our long-term strategic ambitions. Use of independent executive search firms
ensures appointments are drawn from a diverse pool of candidates.
Ahead of target with 60% female representation as at financial
year-end and up to the date of this report.
Appoint a female director to at least one of the
senior Board positions (Chair, CEO, SID, CFO).
Consideration of this forms part of the Board and ExCo succession planning process,
as well as in the development of our internal talent pipeline.
Ahead of target with two of the senior Board positions (SID and CFO)
held by female directors.
Maintain at least one director from an ethnic
minority background on the Board.
Succession planning reviews evaluate the Board’s capabilities to ensure they support
our long-term strategic ambitions. Use of independent executive search firms
ensures appointments are drawn from a diverse pool of candidates.
Target met with one Board member identifying as being from an
ethnic minority background.
Assisting the development of a pipeline of
high-calibre candidates by encouraging a
diverse range of senior individuals within the
business to take on additional responsibilities
and roles to gain valuable board experience.
Our high-potential programmes were paused during the year, as recovery from the
cyber incident was prioritised. We did, however, undertake a broader review of our
approach to identifying top talent and succession planning for executive and senior
roles. Following the review, we have set a revised 7% target for ethnic minority
leadership by 2027. This will be supported by the relaunch of our high-potential
programmes with embedded representation principles in the next financial year.
Progress in diversifying our senior leadership pipeline has been
limited during the year, reflecting a period of significant disruption.
Our current ethnic minority representation amongst senior
managers is 5.3%. Achieving our revised target will require renewed
focus, strengthened accountability and more deliberate action as
we move forward. More information is in the People and Culture
section on pages 25 to 26.
Gender identity and ethnicity data required to be disclosed in accordance with UKLR 6.6.6R (10) can be found on page 94.
The Board and ExCo’s gender and ethnicity data can be found in the Governance Overview on page 49.
Retail and
hospitality
Food and
beverage
Clothing
and textiles International Consumers Logistics Marketing Technology Strategy Finance
Risk
management
Property and store
development
Organisational
design and culture Sustainability
Corporate transactions,
legal and regulatory
1
2
3
4
1
2
1
2
1
2
3
4
1
2
4 2
3
4 2
4
1
2
3
4
1
2
3
4
3
4
3
4 2
3
4
3
4
1
2
3
4 2
3
4
Archie Norman
Stuart Machin
Alison Dolan
Evelyn Bourke
Fiona Dawson
Tamara Ingram
Cheryl Potter
Sapna Sood
Sean Doyle
Roger Burnley
Nick Folland
Link to strategic priorities
1
Create exceptional products
2
Drive profitable sales growth
3
Deliver target operating margins
4
Build the M&S we need to be General Counsel & Company Secretary
Skills and experience of the Board
Marks and Spencer Group plc Annual Report and Financial Statements 2026 57
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
ESG COMMITTEE REPORT
Committee role,
responsibilities,
membership and
effectiveness
The Committee is responsible for
providing strategic oversight and
challenge, to ensure the ESG
strategy remains aligned to the
Company’s strategy and broader
transformation agenda. It reviews
the effectiveness and delivery of
ESG initiatives embedded
throughout the business,
monitoring performance against
agreed targets. It also ensures
ESG activity remains additive to
commercial priorities, operational
improvements, and customer
expectations. The Committee
also monitors and advises the
Audit & Risk Committee on
ESG-related risks, including
climate-connected risks.
The full Terms of Reference for the
Committee can be found at
corporate.marksandspencer.com.
Details of Committee members and
their attendance at all meetings are
on pages 51 to 52.
Information on the skills and
experience of all Committee
members is on pages 51 to 52 and 57.
Details of the Committee’s annual
performance review are on page 55.
On the Committee’s
agenda in 2025/26
The Committee received updates from
management on ongoing projects
supporting the delivery of Plan A and
reviewed progress against sustainability
targets, providing appropriate challenge
where necessary. The Committee invited
several guest speakers throughout the
year to provide external insight.
Thisincluded the Managing Partner
ofKantar’s Sustainable Transformation
Practice, who provided insight on adapting
to disruption and how businesses can
respond and meaningfully integrate
sustainability. The Head of Climate and
Sustainability Policy and Advocacy at a
large oil and gas company also attended
and shared insights on their organisation’s
commitment to reducing its carbon
footprint, promoting sustainability
practices and how this is governed
andmonitored.
Environment
The Committee monitored progress
against our validated near and long-term
net zero targets, with particular focus
onaddressing reduction gaps across
Scopes 1, 2 and 3 and maintaining
momentum in our wider decarbonisation
efforts. Further detail on progress
across each is set out below.
Scopes 1 and 2
Property and Retail
The Company remained on track to
meetits 2030 Property carbon reduction
target. Emissions intensity continued to
fall, supported by efficiencies from the
store rotation programme, energy-efficient
investments, F-gas reduction initiatives,
and ongoing compliance work relating to
Minimum Energy Efficiency Standards.
The store renewal programme also
contributed to reduction in Retail
emissions, including through trials of
low-carbon heating technologies to
further reduce operational impacts.
Logistics
Management updated the Committee on
emission reductions across the logistics
network driven primarily by network
rationalisation, targeted efficiency
projects, and the benefits ofwider grid
decarbonisation. TheCommittee
evaluated the balance between reducing
Scope 1 and 2 emissions from warehouse
and logistics operations and enabling the
Company’s growth ambitions.
Committee members also monitored our
continued investment in lower-carbon
transport solutions. Progress included
expansion of the bio-CNG fleet and early
trials of battery electric vehicles.
However, the Committee recognised
external challenges that hamper
progress, particularly in relation to
national infrastructure constraints.
Scope 3
Fashion, Home & Beauty
Conversion of core raw material to
sustainable alternatives remained on track.
Innovations included the development
of mushroom and algae-based alternatives
for faux leather and recycled polyamide
from waste fishing nets. The Committee
was updated on numerous initiatives that
were launched during the year. These
included: a carbon insetting initiative with
cotton farms in Pakistan and India, focused
on renewable energy solutions; adata-
gathering initiative rolled out to Tier 1 and 2
suppliers to strengthen the visibility of
energy use, water, waste and GHG emissions;
and a partnership with Schneider Electric
to provide suppliers with access to the
Supply Chain Renewable Energy
Programme, enhancing renewable energy
adoption. The Company also joined the
Future Supplier Initiative, supporting Tier 2
suppliers with access to sustainable
financing for carbon reduction investments.
Marks and Spencer Group plc Annual Report and Financial Statements 202658
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
ESG COMMITTEE REPORT CONTINUED
Environment continued
Scope 3 continued
Food
The Food business remained well placed
to meet its 2030 targets and continued
to lead the market due to long-term
work on agriculture decarbonisation and
species-specific plans. Emissions remained
concentrated in agricultural supply
chains, with progress made in livestock
decarbonisation, product footprinting
and sourcing deforestation-free soy.
Embedding carbon data into daily
decision making was identified as critical
to sustaining progress. A key initiative
this year was the rollout of Mondra, a
tool enabling product-level carbon
footprinting at scale. Approximately
6,000 product footprints have been
calculated to date, improving
prioritisation and enabling more
targeted interventions.
Social
Ethical trade
The Committee was updated on the
Company’s strengthened and enhanced
Worker Voice Programme in Fashion,
Home & Beauty, where the business
engaged with over 300 suppliers.
AnEthical Trading Initiative Social
Dialogue programme was launched in
Bangladesh, providing Tier 1 suppliers
withtraining to support their monitoring
of ethical practices across Tier 2 suppliers.
The approach continued to evolve toward
deeper supply chain visibility, supported
by risk-based assessment and compliance
monitoring. Food maintained a market-
leading position, underpinned by the
Foods Human Rights Standard, which
includes audit requirements, worker
voicemechanisms and strengthened
duediligence.
Sourcing
The Fashion, Home & Beauty team
provided updates on raw material
sourcing and broader supply chain risk
management, with a key focus on
converting all raw materials to
sustainable alternatives by 2030. A full
cotton traceability project is underway,
alongside increased use of Circulose, a
recycled fibre contributing to further
carbon reductions. The Committee
reviewed the Food business’ approach
tomanaging core supply chain risks,
hearing that both the launch of ‘Plan A
for Farming’ in September 2025 and the
‘Best of British’ farms initiative had
resonated well with customers.
Community and people
The Committee received updates on
colleague-related initiatives, including
progress on gender balance and the
ongoing work to improve representation
of ethnic minority senior leaders. The
partnership with YoungMinds continued
to deliver strong engagement and
impact, supporting young people’s
mental health across the UK. The
Committee provided insight and
feedback to shape the future
communities strategy for 2027
andbeyond.
Governance, communication
andreporting responsibilities
The Committee provided guidance as
part of the governance process in the
creation and approval of Plan A 2030,
the forward-looking strategy for the
business’ ESG approach (see page 27
formore information). The regulatory
landscape continued to evolve,
particularly with the progression of the
Corporate Sustainability Reporting
Directive, associated EU implementation
updates, and the UK Sustainability
Reporting Standards. TheCommittee
therefore focused on strengthening data
quality, enhancing governance
structures and ensuring continued
readiness for future
reportingrequirements.
The Committee also approved the
Company’s 2025:
•
ESG Report.
•
Modern Slavery Statement.
•
TCFD Report in the Annual Report
andFinancial Statements.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 59
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
AUDIT & RISK COMMITTEE REPORT
Committee role,
responsibilities,
membership and
effectiveness
The Committee is responsible for
monitoring the integrity of the
financial statements, reviewing
the significant financial reporting
judgements within them, and
maintaining an appropriate
relationship with the external
auditor. It also reviews the internal
audit programme and effectiveness
of the Internal Audit & Risk function,
and assesses the Group’s risk
framework and systems of
internalcontrol.
The full Terms of Reference for the
Committee can be found at
corporate.marksandspencer.com.
Details of Committee members and
their attendance at all meetings are
on pages 51 to 52.
Information on the skills and
experience of all Committee
members is on pages 51 to 52 and 57.
Details of the Committee’s annual
performance review are on page 55.
On the Committee’s
agenda in 2025/26
In addition to the Committee’s usual
cadence of activities summarised below,
throughout the cyber incident members
of the Committee remained in regular
formal and informal communication with
management and our external auditor,
Deloitte. It also continued to act as a
critical point of oversight and guidance
during the business’ recovery (read more
on page 61).
May 2025
•
Discussion: impact of the cyber
incident on the preparation of the
2024/25 Annual Report and Accounts
(ARA), including:
–
Steps taken to ensure the integrity and
completeness of financial records.
–
Accounting treatment of
theincident.
–
Additional disclosures.
–
The effectiveness of the internal
control environment.
•
Year-end approvals including:
–
2024/25 ARA and the Full Year
Results announcement.
–
Long-term viability assessment
process.
–
Going concern statement.
–
GSCOP compliance report.
–
Modern Slavery Statement.
•
Reviewed Deloitte’s Full Year External
Auditor report.
•
Received an update on the ongoing
Provision 29 readiness activities and next
key areas of focus (see more on page 62)
.
•
Discussion: Internal Audit & Risk (IA&R)
report including the ongoing delivery
of the Internal Audit (IA) plan and
reallocation of resources to new
priorities (see more on page 64).
•
Considered the results of the external
auditor effectiveness review.
•
Executive risk updates including a
detailed review of the cyber incident
and initial response.
September 2025
•
Discussion: the complexities of Half
Year reporting post-cyber incident.
•
Reviewed priority financial control
activities and rigour of interim control
processes.
•
Received the financial controls
roadmap including an update on M&S’
approach to compliance with the new
Provision 29 requirements.
•
Reviewed Deloitte’s External Auditor
interim review planning report.
•
IA&R updates including:
–
Results from prioritised reviews
including on interim financial controls.
–
Progress made in strengthening the
information security controls
framework of M&S’ India joint venture.
•
Governance approvals including:
–
Assurance for the sustainability KPIs
linked to Marks and Spencer plc’s
revolving credit facility.
–
Bribery risk assessment.
–
Changes made to the Gifts, Hospitality
and Entertainment Policy.
•
Executive risk updates including:
–
Group safety: oversight of the
impact on, actions taken, and
recovery of the safety control
environment during the cyber
incident and focus areas for moving
from recovery to business as usual in
the second half of the year.
–
Legal and regulatory: following the
cyber incident, consideration of the
legal and regulatory landscape and
interactions with M&S’ regulators.
October 2025
•
Approved the Half Year Results
announcement.
•
Considered and approved the going
concern assessment.
•
Discussion: the financial controls
declaration process for the Half
YearResults.
•
IA&R report including:
–
The interim review of principal risks
and uncertainties.
–
Half Year review of compliance
against the Group’s risk appetite
statements.
•
Received a business continuity update.
•
Discussed Deloitte’s External
Auditorreports:
–
Interim report.
–
Preliminary planning report for
FullYear 2025/26.
•
Executive risk updates including:
–
Digital & Technology (D&T):
progress made on recovery
including resilience activities
aheadof our peak Christmas
tradingperiod.
–
Cyber-security: results of a
‘redteam’ exercise.
Marks and Spencer Group plc Annual Report and Financial Statements 202660
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
AUDIT & RISK COMMITTEE REPORT CONTINUED
January 2026
•
Discussion: restoration of control
activities to pre-cyber incident norms
and impact of interim control processes
on the Full Year audit approach.
•
Considered and approved the
expansion of, and revised terms of
reference for, the Executive Risk &
Compliance Committee.
•
Discussion: Provision 29 readiness
activities including the draft
Group‘material controls’ register
andproposed control effectiveness
assurance model (see more on
page62).
•
Reviewed Deloitte’s External Auditor
Full Year 2026 planning report.
•
Reviewed and approved the annual
Group Tax Strategy.
•
IA&R delivery update since October
including:
–
Actions agreed to enhance
date-expired food processes
andcontrols.
–
Results of post-cyber incident
prioritised reviews and additional
assurance activities.
•
Executive risk updates including:
–
Food and Food Logistics:
management of risk, including
long-term network capacity and
resilience of our supply chain.
–
Fashion, Home & Beauty (FH&B):
assessment of the FH&B risk profile,
covering areas such as stock
management and sourcing.
–
Information security: findings from
an external review of the business’
comprehensive plans.
March 2026
•
First look at the Annual Report
proposed content and schedule.
•
Reviewed the approach to assessing
the effectiveness of the External Auditor.
•
Reviewed the IA&R report which included
:
–
Discussion of the IA&R 2026/27
draftplan.
–
Refreshed Group risk appetite
statements.
–
Year-end assessment of principal
risks and uncertainties for the
Annual Report.
–
Approval of the Group Risk
Management and Fraud policies.
•
Reviewed the performance of
theGroup Treasury function
acrosstheyear.
•
Executive risk updates including:
–
International and franchises:
consideration of the main risk areas
as the International business shifts
into the execution phase of its
transformation.
–
D&T: year-end risk review including
execution of action plans for both
risk management and key controls
as the D&T transformation
programme continues.
–
Property: review of the key risk
profile covering areas such as fire,
health and safety (including RAAC),
property values, and new
spacedelivery.
–
Food safety: deep dive on the
date-expired food controls and
enhancement actions underway.
Digital & Technology andrecovery
In 2025, M&S was the subject of a sophisticated cyber attack; the Committee
remained actively engaged throughout the year with a particular focus on
overseeing the revised risk management plan and the robustness of the
financial controlsframework.
In immediate response to the cyber incident, management reacted swiftly
tocontain the threat. It worked alongside external cyber-security experts
toprotect the business’ data and systems, and mobilised established business
continuity and incident management plans. As part of the recovery, networks
and systems were progressively restored and this included rebuilding certain
file systems which were not recoverable. Throughout, financial control was a
critical focus in both the immediate response and longer recovery period, and
involved redeployment of the Financial Controls and IA&R teams to document
interim control processes. Focus for the second half of the year was on restoring
our strong control foundations. The Committee played a pivotal role in monitoring
the continued integrity of our financial reporting, and ensuring the effectiveness
of the financial controls framework and restoration activities.
Aside from the business-wide response to the cyber incident, D&T remained a
key agenda topic throughout the year. The Committee received detailed updates
on D&T’s plan, focusing on areas of concentrated work for the next 12 months
as the function continues its transformation programme.
Fair, balanced and
understandable assessment
The Committee carried out a thorough
assessment to advise the Board on
whether the 2026 Annual Report is fair,
balanced and understandable. In forming
its view, the Committee considered how
the report had been prepared, reviewed
and verified (outlined in more detail at
corporate.marksandspencer.com),
taking into account the Financial
Reporting Council’s recommended
criteria as well as the overall tone and
narrative throughout the report.
Following its review, the Committee
recommended the 2026 Annual Report
to the Board, advising that it considered
the report to be fair, balanced and
understandable, providing shareholders
with the necessary information to assess
the Group’s position, performance,
business model and strategy.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 61
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Provision 29 readiness activities
A recurring theme for the Committee this year was the business’ approach to
compliance with changes being brought in by the new Provision 29 of the UK
Corporate Governance Code 2024 (the Code). The Provision 29 Steering Group
and the Executive Risk Committee (ERC) provided the Committee with activity
updates throughout the year which included:
•
Definition of ‘materiality’ for controls: proposed approach reviewed and
approved by the Committee.
•
Draft material controls register: using the agreed approach to materiality,
afinalised list of material controls was created, including control descriptions
and owners. As with the Group’s principal risks and uncertainties, these will be
continuously reviewed and updated to ensure coverage of relevant risks.
•
Assurance of control effectiveness: to support the Board’s ability to make
adeclaration on control effectiveness, an assurance model was agreed
bythe Committee.
•
Extension of the ERC’s remit to Executive Risk & Compliance Committee:
the ERC’s remit was expanded to incorporate compliance oversight,
strengthening its role in driving the business’ focus on risk management,
and providing challenge and support where required on readiness activities,
fraud and whistleblowing.
•
Refresher training: with a return to normal rhythm of control activities, refresher
training was delivered across finance areas for those reviewing controls.
•
2025/26 trial run: dry run testing of material controls and assurance
processes, including a mock declaration, planned for post-year end.
AUDIT & RISK COMMITTEE REPORT CONTINUED
Presentation of the financial
statements
The Committee considered the
presentation of the financial statements
and, in particular, the use of alternative
performance measures and the presentation
of adjusting items in accordance with the
Group accounting policy. Under this
policy, adjustments are only made to
reported profit before tax where income
and charges are significant in value and/
or nature. Management provided detailed
updates outlining the judgements
applied in relation to the disclosure of
adjusting items. In the current year, these
included: costs associated with the cyber
incident; the implementation and
execution of strategic programmes; net
charges associated with the acquisition of
Gist; impairment reversals and write-offs
of the carrying value of stores and other
property charges; charges relating to the
M&S Bank transformation and insurance
mis-selling provisions; charges relating to
Ocado Retail Limited’s UK network
capacity review; impairment of investment
in Ocado Retail Limited and legal settlement
and pension net finance income.
See note 5 on page 131.
Store estate programme
(including asset write-offs,
onerous lease charges and
useful economic lives)
The Committee has considered the
assessments made in relation to the
accounting associated with the Group’s
store estate strategy. Management
outlined the accounting treatment of the
relevant charges and reversals, including
impairment, accelerated depreciation,
dilapidations, redundancy and onerous
lease costs (including void periods).
TheCommittee reviewed the basis for the
key assumptions used in the estimation of
charges/reversals. Notable assumptions
related to the costs associated with
property exit/sublet costs, the sale
proceeds expected to be recovered on exit,
where relevant, and the cash flows to be
generated by each cash-generating unit in
the period to closure. The Committee has
challenged management and is satisfied
the assumptions made are appropriate,
and that appropriate costs and associated
provisions have been recognised in the
current financial year.
See notes 1, 5, 15 and 22 on pages 118, 131, 146
and 165 respectively.
Impairment of property,
plant and equipment
The Committee has considered the
assessments made in relation to the
impairment and impairment reversals of
tangible fixed assets, including land and
buildings, and store assets. Management
provided detailed reports outlining the
treatment of impairments and reversals,
valuation methodology, the basis for key
assumptions (e.g. discount rate and
long-term growth rate), and the key drivers
of the cash flow forecasts. The Committee
challenged management and is satisfied
these are appropriate. The Committee also
reviewed the sensitivity analysis used by
management in its review of impairments
and reversals, including consideration of
the specific sensitivity disclosures in the
relevant notes. In addition, the business
plans detailing management’s expectations
of future performance are Board approved.
The Committee is satisfied that appropriate
impairments and reversals of tangible
assets have been recognised.
See notes 1, 5 and 15 on pages 118, 131 and 146
to 149 respectively.
Significant issues
The Committee has assessed whether
suitable accounting policies have been
adopted this year and whether
management has made appropriate
judgements and estimates. Throughout
the year, the Finance team has worked to
ensure the business is transparent and
provides the required level of disclosure
regarding significant issues considered
by the Committee in relation to the
financial statements, as well as how
these issues were addressed.
This section outlines the main areas of
judgement considered by the Committee
to ensure appropriate rigour has been
applied. All accounting policies are in
note 1 to the financial statements. Where
further information is provided in the
notes to the financial statements, we
have included the note reference.
Each of the areas of judgement has been
identified as an area of focus and
therefore the Committee has also
received detailed reporting on these
matters from Deloitte.
Marks and Spencer Group plc Annual Report and Financial Statements 202662
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
AUDIT & RISK COMMITTEE REPORT CONTINUED
Significant issues
continued
Going concern and viability
statement
The Committee has reviewed the Group’s
assessment of viability over a period
greater than 12 months. In assessing
viability, the Committee considered the
Group’s position presented in the approved
budget and three-year plan. In the context
of the current challenging environment
resulting from the ongoing cost-of-living
crisis and continued inflationary pressures
on the business, a severe but plausible
downside scenario was applied to the plan.
This included assumptions such as a
sustained economic recession, increased
costs and an inability for the Group to
execute the transformation plan. The
Committee concluded that these
assumptions are appropriate.
The Committee also reviewed the Group’s
reverse stress test that was applied to the
model, and is satisfied this is appropriate in
supporting the Group as a going concern.
Inaddition, the Committee received
regularupdates on the steps taken by
management regarding liquidity, including
the successful extension of its revolving
credit facility for a further five years until
December 2030. The Committee is satisfied
these measures have reduced liquidity risk.
See note 1 on page 118.
Retirement benefits
The pension deficit has decreased during
the year. The Committee reviewed the
actuarial assumptions such as discount
rate, inflation rate, expected return of
scheme assets and mortality which
determine the pension cost and the UK
defined benefit scheme valuation,
concluding they are appropriate. The
assumptions have been disclosed in the
financial statements.
See note 11 on page 137.
Valuation of Marks and
Spencer Group plc company
only investment
Marks and Spencer Group plc holds
investments in Group companies which
are reviewed annually for impairment.
Management prepared an impairment
review based on estimated value in use
of the Group. A full reversal of impairment
charges recorded in prior years has
previously been made (see note C6 on
page 177). The Committee reviewed
management papers outlining the key
assumptions used in calculating the
value in use and is satisfied these
areappropriate.
ORL consolidation – acquisition
accounting and valuation of
assets and liabilities
Control of ORL passed on 6 April 2025,
asexpected, when Ocado Group
relinquished certain rights granted
underthe terms of the original transaction.
As a result, the Group’s investment in
ORL, as well as the results of ORL, have
been accounted for as a subsidiary and
consolidated from April 2025. The change
in control has been accounted for as a
business combination under IFRS 3 (note
29). The Committee’s assessment of the
key judgements applied in reaching the
conclusions in the previous financial
year remains unchanged, and it is
satisfied with the accounting treatment
and disclosures.
Impairment of ORL goodwill
Following the consolidation of ORL on
6April 2025, goodwill and indefinite life
assets are required to be tested for
impairment annually in accordance with
IFRS. Recoverability of goodwill and
indefinite life assets must be tested for
impairment on at least an annual basis.
Goodwill impairment testing involves
significant judgement and the inclusion of
key assumptions such as revenue growth,
margin development, terminal growth
rate and discount rate. The ORL goodwill
impairment testing used cash flow
projections derived from the ORL
board-approved five-year plan. Cash flows
beyond this period were extrapolated
using a terminal growth rate.
The Committee reviewed the results of
management’s impairment analysis
which outlined the valuation methodology,
the basis for key assumptions (e.g. discount
rate and long-term growth rate) and the
key drivers of the cash flow forecasts.
The Committee challenged the key
assumptions applied by management
and is satisfied these are appropriate.
The Committee also reviewed the
sensitivity of management’s model to
reasonably possible changes in key
inputs. The Committee concurred with
management that no impairment was to
be recognised and considered therelated
disclosures on goodwill andimpairment
testing in note 14 to beappropriate.
Cyber incident
In April 2025, the Group experienced
acyber incident that led to temporary
disruption to some of its services,
processes and systems, as a result of
ourproactive management of the
incident to protect customers, suppliers,
colleagues and the business.
The Committee received updates on
engagement with external cyber-security
experts which included engagement with
the relevant authorities, including reporting
the incident to the National Cyber Security
Centre and the UK’s Information
Commissioner’s Office (ICO), as well as
the work undertaken torestore our
networks and systems, support business
operations through manual and alternative
processes, and management’s actions
taken to support interim processes with
robust interim controls.
The Committee also reviewed
management’s assessment of the
financial reporting implications of the
incident. This included the treatment of
certain costs directly related to the
incident as adjusting items and the
oversight of additional temporary
controls put in place to maintain the
completeness and integrity of the
Group’s financial records, allowing the
Committee to be satisfied that the
financial statements give a true and fair
view of the Group.
In addition, to support the Committee’s
understanding and conclusions on the
impact of the incident and monitoring of
the business recovery, the Committee
considered updates and documentation
provided by management on the
incident, and subsequent recovery.
Thisincluded input from the Group’s
in-house Digital & Technology team and
external advisers. This was considered
alongside management’s assessment of
going concern and long-term viability,
and whether related disclosures in the
Half Year Results and Annual Report are
clear, fair, balanced and understandable.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 63
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Internal control
environment
The Committee has been delegated
responsibility from the Board for
reviewing the effectiveness of the
Group’s systems of internal control.
Thisincludes financial and non-financial
reporting, operational and compliance
controls and risk management systems.
Risk management
The Committee’s accountability for
overseeing the effectiveness of our
riskmanagement process includes
determining the Group’s risk appetite
(for Board approval) and monitoring how
the business actively manages risks and
mitigations in accordance with it.
Anoverview of the risk management
process is on pages 41 to 42.
Framework of internal
controls
Alongside our risk management processes,
key components of our internal controls
environment include:
•
Clearly defined lines of accountability
via a Group delegation of authority
and corresponding delegations to
underlying business areas.
•
The Code of Conduct and suite of
policies, setting the minimum
commitments for our business
conduct. These commitments are
linked to the Group’s principal risks
and uncertainties.
•
Procedures, operating standards and
colleague training, to support the
management of key risks and establish
ways of working within the Board’s
approved risk appetite. These cover
areas ranging from financial reporting
to information security and trading
safely in stores.
Relevant business areas and functions
own the underlying components of our
internal controls environment, and are
responsible for ensuring control
processes and activities are maintained
and operate effectively. Functional
assurance activity also takes place
across the business to target key risk
areas. This work is delivered by business
experts or specialist functional teams,
including Financial Controls, Cyber-
Security and Group Asset Protection
teams. Where relevant, these activities
are overseen and challenged by our
senior management forums, including
Business Boards, the Executive Risk &
Compliance Committee and the Data
Protection Committee.
At each meeting, the Committee is
updated by a rotation of business
leadership on risk management, internal
control and assurance activities.
Examples of the updates received this
year are detailed on pages 60 to 61.
Internal Audit & Risk
(IA&R)function
Our IA&R function provides additional
oversight and assurance to the Committee
in discharging its responsibilities, by
supporting the business in improving
the overall control environment and
identifying risks requiring mitigation.
The Head of IA&R has direct access to
the Committee and the IA&R function
has unrestricted access to the Group’s
records, physical properties and people
required to carry out any engagement.
More information about the IA&R
function can be found in its Functional
Charter (annually reviewed and
approved by the Committee) at
corporate.marksandspencer.com.
The Committee approves an Internal
Audit Plan annually. The plan is
structured to align with the Group’s
strategic priorities and key risks and is
developed by the IA&R function with
input from management. The plan is
reviewed periodically throughout the
year to confirm it remains relevant for
new and emerging circumstances, both
internal and external. The findings and
actions from IA&R reviews are agreed
with the relevant business area,
communicated to the Committee and
tracked through to completion. Examples
of internal audits undertaken during the
year are detailed on pages 60 to 61.
The Committee considered the IA&R
function’s effectiveness in May 2026,
agreeing its leadership, structure and
available resources are appropriate and
remain effective.
Effectiveness
The Committee considered whether the
Group’s framework of internal controls
operated effectively throughout the
financial year 2025/26. Instances where
the effectiveness of internal controls
were deemed to be insufficient were
discussed during the year, either by the
Committee or the Board, and the
resulting improvement plans were
monitored. The Committee also
considered the controls findings raised
in the Independent Auditor’s Report on
pages 99 to 111.
In April 2025, the Board and the
Committee were made aware of a cyber
incident impacting the business and the
steps taken by management to protect the
business’ systems, customers and data.
Members of the Committee were in regular
formal and informal communication with
management and Deloitte throughout the
year. In particular, they were kept informed
on the impact of the cyber incident on the
control environment and effectiveness
of any interim controls, as well as the
roadmap to restoration of pre-incident
norms. The Committee received regular
updates on priority control activities
focused on:
•
Identifying a subset of priority
controls for recovery from our
population of key controls.
•
Redeployment of resource from the
Financial Controls and IA&R teams to
support documentation of interim
processes with appropriate controls
inplace.
•
Restoration of business-as-usual
control activities and the transfer
ofany remaining interim control
processes back to pre-cyber incident
norms by the end of the financial year.
Significant work was undertaken
throughout the year to maintain and
enhance the overall system of internal
controls, both as part of the restoration
of control activities to pre-cyber incident
norms, and the business’ Provision 29
readiness activities (see more on page 62),
so as to give the Committee assurance
on the effectiveness of the internal
control environment as at the balance
sheet date.
AUDIT & RISK COMMITTEE REPORT CONTINUED
Marks and Spencer Group plc Annual Report and Financial Statements 202664
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
External Auditor
Audit firm Deloitte LLP
Date
appointed
2014 (reappointed at the
2025 AGM)
Lead audit
partner
Jane Whitlock (in post
since the start of the
2024/25 audit)
Non-audit
fee ratio
0.22:1 (for the year
ended 28 March 2026)
Tenure
Following a competitive audit tender
process, Deloitte was reappointed by
shareholders as the Group’s statutory
auditor at the 2025 AGM. The lead audit
partner Jane Whitlock has been in post
since the start of the 2024/25 audit.
The Committee recommends that
Deloitte be reappointed as the
Company’s statutory auditor for the
2026/27 financial year. Having regard to
relevant regulatory and governance
requirements, including the Financial
Reporting Council’s Minimum Standard
for Audit Committees and the Code, the
Committee believes the independence
and objectivity of the external auditor
and the effectiveness of the audit process
are safeguarded and remain strong.
AUDIT & RISK COMMITTEE REPORT CONTINUED
Effectiveness
The Committee monitors the
effectiveness of the external auditor
continuously throughout the year.
Committee members have the opportunity
to meet with the lead audit partner without
management present after each
Committee meeting. This provides
opportunities for open conversations
and allows the Committee to assess
whether the external auditor has
appropriately challenged management’s
analysis. The external auditor provided
the Committee with a planning report
ahead of the 2025/26 audit, giving
Committee members the opportunity
tocomment and input.
As well as this regular monitoring, the
Committee annually assesses the quality
of the external audit. A targeted group
of individuals that have regular interactions
with the external auditor was asked to
complete a tailored questionnaire. The
Committee was provided with a summary
of the responses received to assist with
its own considerations.
Management agreed that the audit
partner and team have a good
understanding of our business, our
sector, and the risk environment in which
we operate. Management views the
auditor’s engagement as productive and
positive overall, noting that early
engagement on key accounting
judgements continues to be appreciated.
This has been particularly valuable in
relation to the cyber incident; the
consolidation of Ocado Retail Limited
and subsequent goodwill impairment
testing; and the appropriate treatment
for the store estate programme.
Feedback centred around management’s
desire for earlier engagement with senior
audit team members, to clarify the scope
of review requests and resolve queries
more efficiently.
Non-audit fees
The Committee is satisfied the Company
remained compliant with both the UK
Corporate Governance Code and the
Financial Reporting Council’s Ethical and
Auditing Standards in respect of the
scope and maximum permitted level of
fees incurred for non-audit services
provided by Deloitte. Where non-audit
work is performed by Deloitte, both the
Company and Deloitte ensure adherence
to robust processes to prevent the
auditor’s objectivity and independence
from being compromised. To safeguard
the independence and objectivity of the
external auditor and the audit process,
the Committee’s policy requires that all
non-audit work performed by Deloitte
with fees in excess of £50,000 are put to
the Committee for prior consideration
and approval. For non-audit work, where
fees are below £50,000, approval is
obtained from the CFO and the
Committee is notified of all work falling
within this threshold. A full breakdown of
the total fees paid, and details on the
non-audit services provided by Deloitte,
can be found in note 4 to the financial
statements on page 130.
The non-audit fees to audit fees ratio for
the financial year ended 28 March 2026
was 0.22:1, compared with the previous
year’s ratio of 0.175:1. The total non-audit
fees paid to Deloitte for the year were
£0.9m. The increase in these non-audit
fees was driven by additional Half Year
review fees as a result of the cyber incident.
In addition, the Committee reviewed
andapproved the audit fee for the year,
making sure any increase was understood
and reasonable.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 65
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION COMMITTEE REPORT
Committee role,
responsibilities,
membership and
effectiveness
The Committee is responsible for
Remuneration Policy,
performance-related pay
schemes and share-based
incentive plans, ensuring
practices are designed to support
and promote the long-term
success of the Company and
delivery of its strategy. The
Committee also reviews
remuneration frameworks for
Executive Directors and senior
management in the context of our
culture and wider colleague pay.
The full Terms of Reference for the
Committee can be found at
corporate.marksandspencer.com.
Details of Committee members and
their attendance at all meetings are
on pages 51 to 52.
Information on the skills and
experience of all Committee
members is on pages 51 to 52 and 57.
Details of the Committee’s annual
performance review are on page 55.
Year in review
2025/26 has been a challenging year for
M&S. During the cyber incident, colleagues
responded with exceptional commitment
and resilience, led by an outstanding
management team who together kept the
business trading in the most difficult of
times. Food was the standout performer,
accelerating in the second half of the year
delivering both sales and volume growth.
In Fashion, Home & Beauty, recovery has
taken longer, however major steps have
been taken to restore online trading and
accelerate our supply chain transformation.
Despite the operational challenges,
customer perceptions of style saw an
encouraging improvement and our
growth ambition remains strong.
As disclosed in last year’s report, target
setting for the 2025 PSP awards was
delayed until appropriately stretching
but realistic goals could be set post
incident. The Committee followed a
rigorous process considering forecasts
and alignment with shareholders’
interests to ensure that the agreed
targets were robust. Those targets were
then disclosed in December 2025.
The Committee also spent time considering,
and discussing with management, the
2025/26 Annual Bonus Scheme. As set out
later in my letter, together we took decisive
action and agreed with management; that
no bonus would operate for Executive
Directors in 2025/26.
As ever, our reward principle of investing
in the lowest paid colleagues first remains
unchanged. We are committed to
continuing to invest in those who work
tirelessly in our stores and make such a
vital contribution to M&S, aiming to
ensure that we remain one of the more
rewarding places to work in UK retail.
As we look forward, the Remuneration
Committee is focused on continuing to
ensure that our Remuneration Policy
supports delivery of the Group’s strategy
and supports a high-performance culture.
We remain committed to aligning reward
outcomes with the long-term interests of
shareholders, while also considering the
experience of our wider workforce.
2025/26 highlights
During the year, the Committee approved
executive remuneration decisions and
noted changes to pay and benefits
across the business. Remuneration
highlights included:
•
Review of the Directors’ Remuneration
Policy and consultation with our
stakeholders. We consulted with 25
shareholders, representing over 50%
of share capital.
•
Over £70m investment in pay for our
UK retail colleagues. Customer
Assistants’ pay increased by 6.4% to
£13.41, and £14.74 in London.
•
Executive pay decisions were made in
the context of broader colleague pay.
The Executive Directors’ 5% salary
increase is below the 6.4% awarded to
Customer Assistants and in line with
the salaried pay review budget of 5%.
•
In light of the cyber incident, the
Committee and management jointly
agreed that no bonus scheme would
operate for Executive Directors for
2025/26.
•
The 2023 Performance Share Plan
(PSP) vested at 78.8% of maximum for
the CEO. The Committee determined
the formulaic outcome reflected the
Company’s underlying performance
over the three-year performance period.
•
Over 5,500 colleagues benefited from
M&S’ strong share price performance
over the last three years by being
members of the 2022 ShareSave
scheme, which matured in February 2026.
On average, colleagues received a gain
of £5,900.
Remuneration Policy review
In line with the usual three-year cycle, we
are required to submit our Remuneration
Policy to shareholders for approval at
the AGM in July 2026. The Committee
undertook a thorough review to ensure
that the Policy remains appropriate for
M&S and is aligned to our long-term
strategy. Our review concluded that the
Policy continues to achieve these aims
and remains largely fit for purpose.
Inaddition, we considered external
benchmarking data for appropriate
comparator groups (major retailers,
similar-sized listed companies) and were
satisfied that the current package
remains competitive. We are therefore
proposing only modest changes to
ensure there is fairness in its application
and that there is a specific long-term
focus on reshaping M&S for growth.
Theproposed changes are:
•
Shareholding requirements – we are
proposing to increase shareholding
requirements for Executive Directors
from 250% to 300% of salary for the
CEO and from 200% to 250% of salary
for other Executive Directors. Ensuring
that our Executive Directors remain
strongly aligned with the shareholder
experience is a key priority for
theCommittee.
Marks and Spencer Group plc Annual Report and Financial Statements 202666
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION COMMITTEE REPORT CONTINUED
Remuneration Policy review
continued
•
Bonus deferral – we are proposing to
add flexibility to scale down bonus
deferral where shareholding
requirements are met. There are no
current plans to reduce bonus deferral
for 2026/27 and the existing approach
will remain; 50% of any bonus will
continue to be deferred into shares for
three years. The flexibility proposed is
to ensure that the Policy remains
competitive over its three-year
lifetime and will only be implemented
by the Committee after careful
consideration. This includes ensuring
continued significant long-term
alignment of the interests of the
Executive Directors to that of
shareholders and that malus and
clawback provisions can be
implemented if required.
In developing our proposed
Remuneration Policy, set out on page 71,
we engaged with 25 shareholders,
representing over 50% of our issued
share capital. I would like to thank our
major shareholders for their engagement
and for the overall positive feedback
they provided on our proposals.
Supporting our people
Oversight of remuneration across the
wider colleague population remains a
key priority for the Committee. When
determining the appropriateness of the
senior remuneration framework, and
inparticular salary increases, we
considered wider colleague pay and
thebroader external context.
During the year, the Committee discussed
and approved (where relevant):
•
Pay and benefits across the Group,
including noting the pay review for
hourly paid Customer Assistants. We
were very supportive of management’s
continued approach of investing in our
lower-paid retail colleagues, who are
integral to the Company’s success by
providing a great experience for
ourcustomers.
•
The Committee also considered
colleague views. BIG plays a critical
role in this and collects feedback and
views on pay packages, colleague
discount and ShareSave. The BIG Chair
attends a Remuneration Committee
meeting each year.
•
The overall spend on the pay review
and the allocation approach for
salaried and management colleagues.
•
The remuneration packages for all
senior leadership changes.
•
An increase of 5% in Executive
Directors’ pay, effective from 1 July
2026. The Committee determined an
increase was appropriate at a level
lower than pay increases for Customer
Assistants (6.4%) considering their
overall remuneration. The general
salaried pay review budget was 5%.
Remuneration outcomes
for2025/26
The Committee carefully considered the
performance outcomes for 2025/26,
taking into account the broader context,
stakeholder views and to ensure the
underlying performance of the business
was reflected.
2025/26 Annual Bonus Scheme
(ABS)
Having considered the impact of the
cyber incident on the performance of
the business, and following discussion
with the Executive Directors, a joint
decision was taken that, for 2025/26 only,
no bonus scheme would operate for the
Executive Directors. Their performance
continued to be measured against a
scorecard of individual objectives
aligned to the strategic priorities set out
earlier in this report; however, no
financial payment will be made in
respect of their achievements. The
Committee considered the
appropriateness of this decision at a
time when executives are working harder
than ever and believes, bearing in mind
both the shareholder experience and
wishes of management, this was the
right decision for M&S in 2025/26.
2023 Performance Share Plan
(PSP)
The Committee reviewed performance
against the 2023 PSP metrics, reflecting
the Company’s adjusted earnings per
share (EPS), adjusted return on capital
employed (ROCE), relative total
shareholder return (TSR) performance
and delivery of the strategic objectives.
It determined a vesting outcome of
78.8% of maximum.
The Committee considered the
appropriateness of applying discretion
to the vesting outcomes. We considered
the impact of the cyber incident and,
having noted that this occurred only in
the final year of the three-year
performance period, determined that
the formulaic vesting outturn was fair
and appropriate. The Committee was
satisfied that the outcome is reflective
of the strong shareholder experience
over the performance period, with M&S
delivering a TSR of 146% compared to
48% for the FTSE 100 index over the
same period.
The Committee is comfortable that the
Policy operated as intended in 2025/26
and that incentive payments made to
Executive Directors during the year are
appropriate in the context of business
performance.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 67
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION COMMITTEE REPORT CONTINUED
Implementation of the
Remuneration Policy for
2026/27
The Committee considered the targets
set for the 2026/27 ABS and 2026 PSP to
ensure they are stretching and that there
is appropriate alignment between
driving exceptional performance and
retaining talent.
2026/27 ABS
The Committee reviewed the scheme
design, operation and targets for the
2026/27 ABS. We agreed performance
should continue to be measured against
M&S Group adjusted PBT (70%) and
individual objectives (30%), believing this
remains appropriate when considering
the continuing drive to reshape M&S for
growth. We also agreed that the maximum
opportunity under the scheme should
remain at 200% of base salary.
2026 PSP
The Committee reviewed the scheme
design, performance metrics and award
levels for the 2026 PSP. We agreed the
2026 PSP should retain the same financial
measures as for prior years – 30% adjusted
EPS, 30% adjusted ROCE and 20% relative
TSR – the remaining 20% willcontinue to
be subject to strategicmeasures.
The Committee intends to grant 2026
PSP awards of 250% of salary to the CEO
and CFO in July 2026.
See Figure 14 on page 86 for further
details on how the Directors’ Remuneration
Policy will be implemented in 2026/27.
Conclusion
In what has been a challenging year, M&S
has responded with exceptional resilience
and has emerged stronger from
theexperience.
The Committee remains focused on
ensuring that executive remuneration
supports delivery of the M&S strategy,
reinforces a high-performance culture
and maintains strong alignment with
long term shareholder value, while
remaining mindful of the wider
workforce context.
I would again like to thank our shareholders
for their engagement and feedback on
our proposed Policy, which aims to
continue to support the retention and
motivation of our Executive Directors.
I trust that this report is clear in
explaining the Committee’s decisions
and remuneration outcomes in 2025/26.
Fiona Dawson
Chair of the Remuneration Committee
19 May 2026
Marks and Spencer Group plc Annual Report and Financial Statements 202668
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION AT A GLANCE
Executive Directors’ remuneration structure
Fixed pay Annual bonus PSP
Total pay
Base salary
Benefits
Pension benefits
200% of salary maximum bonus
opportunity
250% of salary
Measured against adjusted EPS,
adjusted ROCE, relative TSR and
strategic measures
Measured against M&S Group
adjusted profit before tax and
individualperformance
Read more on page 83. Read more on page 85.
Single figure 2025/26
Stuart Machin
Alison Dolan
Fixed pay PSP PSP attributable to share price appreciation
2023 PSP award vesting
TSR performance vs the
FTSE100 and peer group
Total shareholder return, measured
over three years in line with our PSP
performance period.
Read more on page 85.
2025/26 Annual bonus
The Committee and
management jointly
agreed that no bonus
scheme would operate
for Executive Directors
for 2025/26
Read more on page 83.
£672k
£3,968k£1,409k£1,646k£913k
£672k
Pay outcomes for 2025/26
Marks and Spencer Group plc Annual Report and Financial Statements 2026 69
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
84%
146%
68%
48%
100%
5%
67%
EPS
(30% weighting)
M&S
ROCE
(30% weighting)
FTSE 100
TSR
(20% weighting)
Median TSR
of PSP peer
group
Strategic
(20% weighting)
Outcome:
78.8%
of maximum
Link to our strategic priorities:
1
Create exceptional products
2
Drive profitable sales growth
3
Deliver target operating margins
4
Build the M&S we need to be
REMUNERATION AT A GLANCE CONTINUED
Summary of proposed Remuneration Policy and implementation for 2026/27
Fixed pay
CEO salary:
£908,979
(5% increase)
CFO salary:
£630,000
(5% increase)
Salary increases in
line with salaried
colleagues (5%) and
below Customer
Assistants (6.4%)
Pension contribution
unchanged – aligned
with that available
tocolleagues
(maximum employer
contribution of
12%ofsalary)
Benefits are
unchanged and in
line with the Policy
Annual bonus
Policy change: flexibility to reduce or remove deferral where
shareholding guidelines are met.
PSP
Shareholding requirement
Policy change: increase to shareholding requirements.
Colleague highlights
Salary increases:
6.4%
for Customer Assistants and
5%
for salaried colleagues
ShareSave:
Over 5,500
colleagues share
profit of£32m
from ShareSave scheme
Average profit of
£5,900
Pension:
Up to
12%
employer contribution
Competitive benefits package
– includes a market-leading 20%
colleague discount, life assurance
andVirtualGP as well as enhanced
maternity, paternity and
adoptionleave
Read more on page 81.
2
3
4
Maximum opportunity: 200% of salary
forbothExecutive Directors
2026/27 bonus measures:
•
70% M&S Group adjusted PBT
•
30% individual objectives
2026 PSP awards: 250% of salary
forbothExecutiveDirectors
2026 PSP award measures:
•
30% adjusted EPS
•
30% adjusted ROCE
•
20% relative TSR
•
20% strategic measures
CEO:
250% 300% of salary
CFO:
200% 250% of salary
Targets are commercially sensitive and will be disclosed retrospectively.
1 2 3 4
4
2026
2026
2027
2027
2028
2028
2029
2029
2030
2030
2031
2031
2032
2032
Performance period Deferral period
Performance period Holding period
Marks and Spencer Group plc Annual Report and Financial Statements 202670
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION POLICY
Shareholders approved the Remuneration Policy at the AGM in 2023. As such, the Company is required to seek approval for a new Policy at the AGM on 7 July 2026, from
whichdate the updated Policy will apply. During the year, the Committee reviewed the overall remuneration framework in the context of the external regulatory environment,
toensure that it remains fit for purpose. The framework is designed to fulfil M&S’ reward philosophy, which aims to support and drive the business’ strategy.
Key changes from the Policy approved by shareholders at the 2023 AGM are detailed below and noted in the tables that follow:
•
Shareholding requirements – the proposed policy increases shareholding requirements for Executive Directors from 250% to 300% of salary for the CEO and from 200% to250%
ofsalary for other Executive Directors. Ensuring that our Executive Directors remain strongly aligned with the shareholder experience is a key priority for the Committee.
•
Bonus deferral – the proposed policy adds flexibility to scale down bonus deferral where shareholding requirements are met. There are no current plans to reduce bonus
deferral for 2026/27 and the existing approach will remain; 50% of any bonus will continue to be deferred into shares for three years. The flexibility proposed is to ensure that
the Policy remains competitive over its three-year lifetime and will only be implemented by the Committee after careful consideration.
Once approved, this Policy may operate for up to three years.
The Policy is designed to attract, retain and motivate our leaders within a framework designed to promote the long-term success of M&S and to be aligned with our
shareholders’ interests.
Figure 1: Executive Directors’ Remuneration Policy table
Element Purpose and link to strategy Operation Maximum opportunity Performance conditions
Salary To attract, retain and motivate high-calibre
executives needed to deliver our strategy
and drive business performance.
Salaries are payable in cash and are normally
reviewed annually by considering a number of
factors, including:
•
Salary increases awarded to colleagues
more widely.
•
Comparable salaries in appropriate
comparator groups.
•
The experience, responsibility and
contribution of the individual and role
within the Group.
While there is no set maximum, any increases
are normally in line with, orlowerthan,
those in the wider workforce.
Individual adjustments in excess of this
may be made outside of this cycle at
thediscretion of the Committee,
whereappropriate.
Such circumstances can include:
•
Where a role scope has changed.
•
Where comparable salaries in the
external market have changed.
•
To apply salary progression for newly
appointed directors.
N/A
Pension To attract and retain high-calibre executives
through a commitment to responsible,
secure retirement funding in line with our
Company values.
Executive Directors may participate in the Your
M&S Pension Saving Plan (a defined contribution
arrangement), on the same terms as all other
colleagues. An alternative cash payment in
lieu of pension contributions is available.
The maximum employer contribution is
aligned with that available to all other
colleagues. This is currently 12% of salary
where the employee contributes 6% of
salary. The alternative cash payment is
currently capped at 5% of salary.
N/A
Link to our strategic priorities:
1
Create exceptional products
2
Drive profitable sales growth
3
Deliver target operating margins
4
Build the M&S we need to be
Marks and Spencer Group plc Annual Report and Financial Statements 2026 71
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION POLICY CONTINUED
Link to our strategic priorities:
1
Create exceptional products
2
Drive profitable sales growth
3
Deliver target operating margins
4
Build the M&S we need to be
Element Purpose and link to strategy Operation Maximum opportunity Performance conditions
Benefits To provide market-competitive benefits
which drive employee engagement and
commitment in our business.
Executive Directors are eligible to receive
benefits in line with our policies.
Where appropriate, our Global/Domestic
Mobility Policy may apply. This may include,
but not be limited to, travel, relocation and tax
equalisation allowances.
Executive Directors are offered a number of
other benefits in line with all other colleagues,
such as life assurance, colleague discount and
salary sacrifice schemes such as Cycle2Work.
Executive Directors may participate in a Save
As You Earn scheme, a Share Incentive Plan
and any other all-employee share schemes on
the same terms as other colleagues.
While there is no set maximum, any
benefits will be provided at a rate
commensurate with the market.
Maximum participation in all-employee
share schemes is in line with local
statutorylimits.
N/A
Annual Bonus
Scheme (ABS)
including the
Deferred Share
Bonus Plan (DSBP)
2
3
4
To drive annual profitability, strategic
change and individual performance in line
with the business plan.
To recognise and reward individual
contributions to the way we do business.
The deferral into shares provides alignment
with shareholders’ long-term interests
following the successful delivery of
short-term targets.
Executive Directors are eligible to participate
in this non-contractual, discretionary scheme.
Payments are made subject to the satisfaction
of predetermined targets set at the start of
the year, as approved by the Committee.
Not less than 50% of any bonus earned is paid
in deferred shares under the DSBP, with the
remainder payable in cash. For Executive
Directors that have met their shareholding
requirement, the Committee has flexibility to
reduce the level of deferral including to zero.
Shares awarded under the DSBP usually vest
after three years subject to continued service.
Clawback and malus rules apply to cash and
DSBP awards respectively; see explanatory
notes (page 74) for more information.
Good leaver and change of control provisions
apply to the deferred shares
(seeexplanatorynotes).
The value of any dividends during the deferred
period may be payable (see explanatory notes).
The Committee retains the right to exercise
discretion, both upwards and downwards, to
ensure that the level of award payable is
appropriate and fair in the context of the
director’s individual performance and the
Company’s overall performance. Where
exercised, the rationale for this discretion
willbe fully disclosed to shareholders in the
subsequent Annual Report.
A maximum annual potential of up to
200%of salary.
Quantifiable one-year performance measures
and targets are set by the Committee around
financial and individual objectives linked with
the sustainable delivery of the business plan.
Financial performance measures comprise at
least 50% of awards and may include but not
be limited to Group PBT.
Typically, no payment for individual objectives
can be earned unless a ‘threshold’ level of
financial performance (e.g. Group PBT) has
been achieved. This threshold level is set by
the Committee taking into account the previous
year’s performance and the business operating
plan for the current year.
For achievement of individual objectives,
nomore than 40% (currently 30%) of the
maximum bonus potential is paid for threshold
performance, and no more than 60% for
target performance. However, the Committee
retains the flexibility to amend the pay-out
level at different levels of performance for
future bonus cycles. This is based on its
assessment of the level of stretch inherent
inthe set targets, and the Committee will
disclose any such determinations
appropriately.
Figure 1: Executive Directors’ Remuneration Policy table continued
Figure 1: Executive Directors’ Remuneration Policy table continued
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION POLICY CONTINUED
Link to our strategic priorities:
1
Create exceptional products
2
Drive profitable sales growth
3
Deliver target operating margins
4
Build the M&S we need to be
Element Purpose and link to strategy Operation Maximum opportunity Performance conditions
Performance Share
Plan (PSP)
1
2
3
4
Measured against the key financial drivers of
the business plan to deliver sustainable
value creation.
To encourage long-term shareholding to
retain Executive Directors and provide
greater alignment with shareholders’ interests.
Executive Directors are eligible to participate
in this non-contractual, discretionary plan.
Executive Directors may receive an annual
award which vests after three years subject to
predetermined performance conditions.
Malus and Clawback rules apply to awards
(seeexplanatory notes).
Good leaver and change of control provisions
apply (see explanatory notes).
The value of any dividends during the vesting
period may be payable (see explanatory notes).
Awards are subject to a further two-year
holding period after the vesting date. Executive
Directors may sell sufficient shares to satisfy
tax liabilities but must retain the net number of
shares until the end of this two-year period.
As with the bonus scheme, the Committee
retains the right to exercise discretion in the
same manner to ensure appropriateness
ofoutcomes.
The maximum value of shares (at grant)
which can be made under an award to an
individual in respect of a financial year is
300% of salary.
The maximum award to be granted in the
2026/27 financial year is 250% of salary.
Performance is measured over a three-year
period against a balanced scorecard of
appropriate measures as determined by the
Committee each year.
For the 2026 awards, this includes EPS (30%),
ROCE (30%), TSR (20%) and strategic
measures (20%). These are chosen as
measures which support and drive
performance in line with business strategy.
Financial measures comprise at least 50%
ofawards.
The threshold level of vesting is 20% of the
maximum.
For performance between threshold and
maximum, awards vest on a straight-line basis.
Shareholding
requirement
4
To drive long-term, sustainable decision-
making for the benefit of the Company and
our shareholders.
Executive Directors are required to hold shares
equivalent in value to a minimum percentage
of their salary within a five-year period from
their appointment date.
Minimum requirement
For the CEO, this requirement is 300% of
salary. For other Executive Directors the
requirement is 250%. Prior to 2026/27, the
requirement was 250% of salary for the CEO
and 200% for other Executive Directors.
Post-cessation shareholding requirement
Executive Directors are required to continue
to hold their shareholding requirement, or,
if their level of shareholding is below the
requirement, their actual shareholding for
two years after leaving M&S.
N/A
Figure 1: Executive Directors’ Remuneration Policy table continued
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Explanatory notes
The Committee reserves the right to make any remuneration payments
notwithstanding that they are not in line with the Policy set out above, where the
terms of the payment were agreed at a time when the relevant individual was not a
director of the Company, or under a prior approved policy and, in the opinion of the
Committee, the payment was not in consideration of the individual becoming a
director of the Company. Such payments or awards will be set out in the annual
report on remuneration in the relevant year.
For these purposes, payments include the Committee satisfying awards of variable
remuneration and, in relation to an award over shares, the terms of the payment are
agreed at the time the award is granted.
Awards granted under the PSP and the DSBP can be made in the form of conditional
share awards, forfeitable shares, options or rights with the same economic effect. In
addition, awards may be settled in cash. Awards may incorporate the right to receive
(in cash and/or shares) the value of dividends (including any dividend tax credit where
applicable) between grant and vesting on the shares that vest. This amount may be
calculated on a cumulative basis, assuming the reinvestment of dividends into shares.
In the event of a variation of the Company’s share capital or a demerger, special
dividend or other event which in the Committee’s opinion may affect the price of
shares, the Committee may alter the terms of awards and the number of shares
subject to them. The terms of awards may be amended in accordance with the
relevant plan rules (which were formally approved by shareholders on 1 July 2025).
Any performance conditions applicable to the PSP awards may be amended by the
Committee if an event occurs which causes it to consider that the performance
condition would not achieve its original purpose and the amended performance
condition is, in the opinion of the Committee, no less difficult to satisfy but for the
event in question.
Our long-term incentive plans provide the Committee with discretion in respect
ofvesting outcomes that affect the actual level of reward payable to individuals.
Such discretion would only be used in exceptional circumstances and, if exercised,
the rationale for this discretion will be fully disclosed to shareholders in the
subsequent Annual Report.
The Remuneration Committee may make minor amendments to the Remuneration
Policy for regulatory, tax or administrative purposes or to take account of a change
inlegislation, without obtaining shareholder approval for that amendment.
Malus and clawback
M&S is committed to ensuring its remuneration arrangements motivate participants
to strive for exceptional performance while also protecting shareholder value from
the Company taking unnecessary risks. As such, malus and clawback provisions apply
to the Executive Directors’ incentive arrangements. All share awards granted from
2013 onwards are subject to malus provisions. Malus provisions allow the Committee,
in its absolute discretion, to determine at any time prior to the vesting of an award
toreduce the number of shares, cancel an award or impose further conditions on
anaward in circumstances for which the Committee considers such action to be
appropriate. Such circumstances may include, but not be limited to, a material
misstatement of the Company’s audited results.
In addition, clawback provisions were introduced in 2015 and apply to cash payments
made under the Annual Bonus Scheme. Awards made under any of the Company’s
other executive share plans (including the PSP) in 2015 and onwards will similarly be
subject to clawback provisions. Clawback provisions enable the Committee, in its
absolute discretion, to reclaim awards paid to individuals for up to three years after
the respective vesting or payment date (or up to two years in the case of PSP awards)
where specified events occur. The specified events that would trigger clawback
include the discovery of a material misstatement resulting in an adjustment in the
audited consolidated accounts of the Company, the assessment of any performance
condition, terms or conditions in respect of an award or payment that were based on
error, or inaccurate or misleading information, the discovery that any information
used to determine the number of shares subject to an award or amount payable was
based on an error, or inaccurate or misleading information, the action or conduct of
aparticipant which, in the reasonable opinion of the Committee, amounts to gross
misconduct or a material breach of the participant’s service contract that falls short
of gross misconduct, and events or behaviour of a participant that have had a
significant detrimental impact on the reputation of any member of the Group,
provided that the Committee is satisfied that the relevant participant was
responsible for the reputational damage and that the reputational damage is
attributable to the participant. Clawback may be affected, among other means,
byrequiring the transfer of shares, payment of cash or reduction of awards.
REMUNERATION POLICY CONTINUED
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REMUNERATION POLICY CONTINUED
Malus and clawback continued
The table below sets out the time period for which malus and clawback will apply for each incentive and why the selected period is most suitable. No malus or clawback has
been applied in the last financial year.
Incentive Malus Clawback Rationale
Annual Bonus Scheme No malus provision (discretion can be applied in year
ifrequired).
Three years after payment date. These time periods have been selected as they best
reflect the period of assessment of individual and
Company performance in relation to the
respectiveincentives.
Deferred Share Bonus Plan Malus provisions apply during the three-year
deferralperiod.
No clawback to be applied to vested awards.
Performance Share Plan Malus provisions apply during the three-year
performance period.
Clawback applies to vested awards for two years
post-vesting.
The longer period applicable to long-term incentives
enables the Remuneration Committee to apply malus
and/or clawback in the event that the circumstances
are not known for some time.
The malus and clawback periods are purposefully designed to align with respective deferral, vesting and holding periods. These are considered appropriate timeframes to
review whether any trigger events have occurred under the malus and clawback provisions. There are robust mechanisms in place to ensure that these malus and clawback
provisions are enforceable.
Performance conditions and target setting
The Committee reviews annually the measures, weightings and targets for the
incentive arrangements for the Executive Directors. In doing so, the Committee
considers several factors which assist in forming a view. These include, but are not
limited to, the strategic priorities for M&S over the short to long term, shareholder
feedback, the risk profile of the business and the macroeconomic climate.
The Annual Bonus Scheme is measured against a balance of profitability and the
delivery of key strategic areas of importance for the business. The profitability
measure used for 2026/27 is M&S Group adjusted profit before tax as this is used
internally to report and assess business performance by the Board and Executive
Committee. Refer to the Glossary on page 186 for the definition of M&S Group
adjusted profit before tax, and to note 5 of the financial statements for a description
of adjusting items.
The PSP is assessed against a balance of measures identified as those most relevant
to driving both sustainable top-line and bottom-line business performance, as well
as providing value for shareholders, and strategic alignment with the business.
This is reflected in the EPS and ROCE measures in the 2026 PSP awards, which focus
on a balance of profitability, cost control and the efficient use of capital investment.
The value delivered to shareholders is reflected by the relative TSR measure in the
2026 PSP awards, which is measured against a bespoke group of retail companies
which are believed to provide a balanced portfolio of those most likely to be
alternative investment choices for M&S shareholders.
Targets are set against the respective annual and long-term operating plans taking
into account analysts’ forecasts, M&S’ strategic plans, prior year performance, estimated
vesting levels and the affordability of pay arrangements. Targets are settoprovide a
sustainable balance of risk and reward to ensure that, while being motivational for
participants, maximum payments are only made for exceptional performance.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Consideration of remuneration framework for the rest
oftheorganisation
When determining the Policy and remuneration arrangements for Executive
Directors, the Committee considers pay and employment conditions of the wider
colleague base to ensure that there is suitable alignment of pay structures. The
Remuneration Committee is also kept informed of general management decisions
relating to colleague pay, including pay reviews.
The Committee strongly believes in the key role colleague voice plays in
contextualising remuneration decisions. Committee members receive colleague
feedback directly and as part of Board meetings. The Committee also engages
withcolleagues directly via BIG, and since 2018, the Chair of BIG has attended one
Remuneration Committee meeting each year to share colleague feedback and
contribute to reward discussions. In 2025/26, this included attending a Remuneration
Committee meeting during the Policy consultation phase, where stakeholder
feedback was discussed.
M&S’ philosophy is to provide a fair and consistent approach to pay. Remuneration
isdetermined by level and is broadly aligned with those of the Executive Directors:
•
Base salaries are reviewed annually and reflect the local labour market.
•
All UK colleagues are eligible to participate in the Your M&S Pension Saving Plan on
the same terms as the Executive Directors. In addition, eligible UK colleagues are
provided with life assurance and colleague discount and may choose to participate
in the Company’s all-employee share schemes and salary sacrifice arrangements.
•
A significant number of colleagues are eligible to be considered to participate in an
annual bonus, the outcome of which for 2026/27 is partially determined by Group
PBT performance. For all participants, part of the bonus is deferred into shares for
three years.
•
Around 140 of M&S’ top senior executives may be invited to participate in the
PSP,measured against the same performance conditions as Executive Directors.
Award levels granted are determined to be aligned with market practice and
reflectan individual’s level of seniority as well as their performance and potential
within the business.
Consideration of shareholder views
The Company is required to seek approval for the new Policy at the AGM to be held
on 7 July 2026. The Board is committed to ensuring that our remuneration framework
supports our strategy, and provides a balance between motivating and challenging
our senior leaders to deliver our business priorities and the long-term sustainable
success of M&S.
The Committee, led by the Committee Chair, consulted with our major shareholders
(representing just over 50% of our total shares in issue) and, given many of our
stakeholders engage their services, a number of shareholder representative bodies.
The Committee reviewed and discussed all the feedback and responses provided by
our shareholders and those representative bodies, who were broadly supportive of
our proposals, and we would like to thank them for their highly valued time.
Figure 2: Recruitment Policy and service contracts
The table below sets out the Company’s policy on the recruitment of new Executive
Directors. Similar considerations may also apply where a director is promoted to
theBoard.
In addition, the Committee in exceptional circumstances has discretion to include
any other remuneration component or award which it feels is appropriate, considering
the specific circumstances of the individual, subject to the limit on variable
remuneration set out below.
The rationale for any such component would be appropriately disclosed. For example,
for internal promotional appointments to the Board, the Committee would honour
any pre-existing contractual remuneration arrangements; these arrangements may
be outside of the Policy detailed on pages 71 to 80.
REMUNERATION POLICY CONTINUED
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Figure 2: Recruitment Policy and service contracts continued
Element Approach
Service contract
•
Executive Directors have rolling contracts for service which may be terminated by M&S giving 12 months’ notice to the CEO and six months’ notice to the CFO. Both individuals are
required to give six months’ notice.
•
There are no further obligations which could give rise to a remuneration or loss of office payment other than those set out in the Remuneration Policy and the Termination Policy.
•
The directors’ service contracts are available for shareholder inspection at the Company’s registered office.
Base salary
•
Salaries are set by the Committee, taking into consideration several factors, including the pay for other Executive Directors, the experience, skill and current pay level of the
individual, and external market forces.
•
For new appointments to the Board, the Committee may set the rate of pay at the lower end of the range for other directors and/or other comparable roles within the market with
the intention of applying staged increases.
Benefits
•
The Committee will offer a benefits package in line with our benefits policy for Executive Directors.
Pension
•
Maximum contribution in line with our policy for Executive Directors (currently up to 12% of salary).
•
An alternative cash in lieu of pension currently capped at 5% of salary is also offered.
Annual Bonus Scheme
•
Eligible to take part in the Annual Bonus Scheme with a maximum bonus of 200% of salary in line with our policy for Executive Directors.
PSP
•
A maximum award of up to 300% of salary in line with our Policy. The maximum award for 2026/27 is 250% of salary.
Buy-out awards
•
Where an individual forfeits outstanding variable pay opportunities or contractual rights at a previous employer because of their appointment with M&S, the Committee may offer
compensatory payments or buy-out awards, dependent on the individual circumstances of recruitment, determined on a case-by-case basis.
•
The Committee in its judgement normally intends that any such payments are made on a like-for-like basis and considers issues such as the plan type, time horizons and valuation
of the forfeited awards. The Committee’s intention would be to ensure that the expected value awarded will be no greater than the expected value forfeited by the individual.
•
Where appropriate, the Committee may choose to apply performance conditions to any of these awards.
REMUNERATION POLICY CONTINUED
Marks and Spencer Group plc Annual Report and Financial Statements 2026 77
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Figure 3: Termination Policy
The Company may choose to terminate the contract of any Executive Director summarily in accordance with the terms of their service agreement, on payment in lieu of notice
of a sum equal to salary, benefits and pension as per their contractual notice entitlement (see page 90).
The Company can make a series of phased payments which are paid in monthly instalments, subject to mitigation. This mechanism allows for any phased payments to be
reduced by the income from any alternative position secured by the former director during the phased payments period.
Service agreements may be terminated without notice and without any payments in certain circumstances, such as gross misconduct. The Company may require the
individual to work during their notice period or may choose to place the individual on garden leave. Such a decision would be made to ensure the protection of the Company’s
and shareholders’ interests where the individual has had access to commercially sensitive information.
The Company’s policy towards exit payments allows for a variety of circumstances where an Executive Director may leave the business. In some cases, if deemed suitable,
theCommittee reserves the right to determine exit payments where the Executive Director leaves by mutual agreement. In all circumstances, the Committee does not intend
to reward failure and will make decisions based on the individual circumstances.
The Committee’s objective is that any such agreements are determined on an individual basis and are in the best interests of the Company and shareholders at that time and
reflect the Executive Director’s contractual and other legal rights.
The table below sets out key provisions for Executive Directors leaving the Company under their service contracts and the incentive plan rules.
Element Approach
Base salary, benefits
and pension benefits
•
Payment made up to the termination date in line with contractual notice periods.
Annual Bonus Scheme
•
There is no contractual entitlement to payments under the Annual Bonus Scheme. If the Executive Director is under notice or not in active service at either the relevant year end
oron the date of payment, there will be no entitlement to any bonus payment, either in cash or shares. The Committee may use its discretion as described above to make a bonus
award, which is normally pro-rated for time worked during the relevant financial year and based on performance assessed at the end of the bonus period.
Long-term incentive
awards
•
Where an Executive Director ceases to be an officer or employee of the Group before the end of the relevant vesting period, the treatment of outstanding awards is determined
inaccordance with the plan rules.
•
In some circumstances, where an Executive Director leaves due to retirement, injury, ill health, death or the sale of the Executive Director’s employing company or business out
ofthe Group, or any other reason at the discretion of the Committee and in accordance with the plan rules, DSBP awards normally vest in full on cessation; PSP awards which have
been held for at least 12 months normally vest when the level of performance has been assessed and agreed at the end of the three-year performance period. The Committee may
determine these PSP awards vest upon cessation as permitted in the plan rules. In either circumstance, any relevant performance conditions would still apply to the PSP awards
andunless the Committee determines otherwise, these would be time pro-rated and subject to the two-year holding period post-vesting.
Repatriation
•
M&S may pay for repatriation where an Executive Director has been recruited from overseas.
Legal expenses and
outplacement
•
Where an Executive Director leaves by mutual consent, M&S may reimburse for reasonable legal fees and pay for professional outplacement services.
REMUNERATION POLICY CONTINUED
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Corporate events
In the event of a change of control or winding up of the Company, unvested share awards will normally vest on the date that the Board notifies participants of such an event.
The number of shares which may vest under awards in these circumstances will be subject to any relevant performance conditions and, in the case of PSP awards, unless the
Committee determines otherwise, time pro-rating. In the event of a demerger, special dividend or other event which, in the opinion of the Committee, affects the price of
shares, the Committee may allow some or all of an award to vest.
Figure 4: Non-Executive Directors’ Remuneration Policy
The table below sets out our Policy for the operation of Non-Executive Director fees and benefits at the Company.
The Committee considers several factors when determining an appropriate fee level for the Chair. The Chair and Executive Directors determine appropriate fee levels
fortheNon-Executive Directors and take into account the time commitment, role responsibility and market practice in our comparator groups when doing so.
All Non-Executive Directors have letters of appointment for an initial three-year term; these are available for inspection at the Company’s registered office.
TheChair’sagreement requires six months’ notice by either party. The Non-Executive Directors’ appointments may be terminated by either party giving three
months’notice.Non-Executive Directors are entitled to receive any fee in respect of their notice period up to the date of termination.
Element Purpose and link to strategy Operation and opportunity
Chair’s fees To provide a fair fee at a level that
attracts and retains a high-calibre Chair.
•
Fees are determined by the Remuneration Committee.
•
Total fee comprises the Non-Executive Director basic fee and the additional fee for undertaking the role.
•
Payments may be made in cash and/or shares.
•
Fees reflect the time commitment, demands and responsibility of the role.
•
Reviewed annually, taking into account market practice in appropriate comparator groups, e.g. major retailers, similar-sized listed companies.
•
The maximum aggregate fees for the Non-Executive Directors’ basic fees, including the Chair’s basic fee, is £2,000,000 p.a. as set out in
our Articles of Association.
Non-Executive
Directors’ basic fee
To provide a fair basic fee at a rate that
attracts and retains high-calibre
Non-Executive Directors.
•
Fees are determined by the Chair and Executive Directors.
•
Payments may be made in cash and/or shares.
•
Fee level recognises the scope of the role and time commitment required.
•
Reviewed annually, taking into account market practice in appropriate comparator groups, e.g. major retailers, similar-sized listed companies.
•
The maximum aggregate Non-Executive Director fees, including the Chair, is £2,000,000 p.a. as set out in our Articles of Association.
Additional fees To provide compensation to Non-
Executive Directors taking on additional
Board responsibilities.
•
Additional fees may be paid for additional time commitments, including undertaking the extra responsibilities of:
–
Board Chair.
–
Senior Independent Director.
–
Committee Chair.
–
Committee Member.
Benefits To facilitate the execution of
responsibilities and duties required by
the role.
•
In line with our other colleagues, the Chair and Non-Executive Directors are entitled to receive colleague discount.
•
The Company may reimburse the Chair and Non-Executive Directors for reasonable expenses in performing their duties and may settle
any tax incurred in relation to these.
•
The Chair and Non-Executive Directors do not participate in pension or performance-related schemes.
REMUNERATION POLICY CONTINUED
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Figure 5: Application of Remuneration Policy
The charts below provide an illustration of the potential future reward opportunities for the Executive Directors under different performance scenarios in 2026/27 under the Policy.
Basis of calculations and key
Fixed
•
Fixed remuneration
•
No pay-out under the annual bonus and no vesting under the PSP
Target
•
Fixed remuneration
•
ABS: 50% of maximum
•
PSP: 50% vesting
Maximum
•
Fixed remuneration
•
ABS: 100% of maximum
•
PSP: 100% vesting
Maximum + 50% share
price growth
•
Fixed remuneration
•
ABS: 100% of maximum
•
PSP: 100% vesting with 50% share price growth
Fixed remuneration
Includes all elements of fixed remuneration:
•
Base salary (effective 1 July 2026, as shown in the table on page 86).
•
Pension benefits as detailed on page 86.
•
Benefits (using the value for 2025/26 included in the single figure table on page83).
Annual Bonus Scheme (ABS)
The value of the deferred element of the annual bonus assumes a constant share
price and does not include additional shares awarded in lieu of dividends that may
accrue during the deferral period.
PSP
The value of the PSP assumes a constant share price (with the exception of the
maximum with 50% share price growth scenario). It does not include additional shares
awarded in lieu of dividends that may accrue during the vesting period.
Stuart Machin
£000
Alison Dolan
£000
£6,000
£5,000
£4,000
£3,000
£2,000
£1,000
£0
£5,000
£4,000
£3,000
£2,000
£1,000
£0
100%
100%
33%
33%
20%
20%
16%
16%
30%
30%
36%
36%
29%
29%
37%
37%
44%
44%
37%
37%
18%
18%
Minimum MinimumOn target On targetMaximum MaximumMaximum + 50%
growth in share
price
Maximum + 50%
growth in share
price
£1,018
£706
£3,063
£2,123
£5,108
£3,541
£6,245
£4,328
REMUNERATION POLICY CONTINUED
Marks and Spencer Group plc Annual Report and Financial Statements 202680
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Fixed pay Bonus PSP Share price appreciation Fixed pay Bonus PSP Share price appreciation
REMUNERATION REPORT
Remuneration in context
Colleague engagement
The Committee strongly believes in the
key role colleague voice plays in
contextualising remuneration decisions.
Committee members receive colleague
feedback directly and as part of
Committee and Board meetings.
The Committee also engages with
colleagues directly via BIG. Since 2018,
the Chair of BIG has been invited
toattend a Remuneration Committee
meeting each year to share colleague
feedback and contribute to
rewarddiscussions.
This engagement gives the Committee
greater visibility of the things that really
matter to colleagues. It also gives the
Committee the opportunity to explain
and discuss our pay practices, and how
executive pay aligns with pay across
thebusiness.
Examples of colleague engagement can
be found throughout this Annual Report,
but particularly on pages 7 and 25 to26.
Colleague reward
We want everyone at M&S to be rewarded
fairly and competitively. The Committee
monitors and reviews remuneration policie
s
in the wider colleague base. Management
provides the Committee with updates on
pay arrangements and their proposed
approach to forthcoming pay reviews,
including hourly paid Customer Assistants.
From April 2026, the rate for Customer
Assistants increased by 6.4% to £13.41
nationally, and £14.74 in London. This
represents an investment of £70m in retail
pay, bringing the total investment to more
than £350m over the last four years. Over
the same period, pay has increased by 34%.
For salaried colleagues, effective July
2026, the salary pay review budget is 5%.
We continue to provide a highly
competitive overall package. This
includes a market-leading colleague
discount, pension contributions up to
12%, life assurance and VirtualGP as well
as enhanced maternity, paternity and
adoption leave.
The Committee reviews all bonus costs
and approves all PSP awards made to
senior executives, considering the
Company’s financial performance and pay
investment in the wider colleague base.
Share ownership across
ourcolleagues
M&S is a proud advocate of employee
share ownership. The Board believes this
supports colleagues sharing in M&S’
success, being owners of our business, and
aligning with our shareholders’ interests.
Across our UK colleagues, M&S has a
significant number of participants in
all-employee share schemes. Around
14,000 colleagues hold over 42m Save
As You Earn (SAYE) options in our
ShareSave scheme and over 3,900
colleagues hold shares in our Share
Incentive Plan (SIP), ShareBuy.
In February 2026, our 2022 ShareSave
scheme matured. Over 5,500 colleagues,
the majority of whom were Customer
Assistants, participated in the scheme.
On average the typical saving was
£55per month and, factoring in the
discounted option price and share price
growth at maturity, the average gain
was£5,900.
Additionally, colleagues who participate
in the ABS receive a portion of their
bonus in shares with deferred vesting
after three years. For our most senior
colleagues, 50% of the bonus award is
deferred, while for less senior colleagues
this deferred element represents a third
of their total award.
ShareAction AGM resolution
At our 2025 AGM, resolution 27 was
requisitioned by a small group of
shareholders coordinated by ShareAction.
The resolution requested detailed data
disclosures relating to our colleague pay
and the pay of our third-party suppliers
and partners. The Board did not support
this resolution, and it was not passed but
received 30.7% support.
M&S is market leading in its employment
practices. We have clear guidelines on
how we contract with third parties and
we attach great importance to ensuring
that subcontracted employees are
appropriately paid and treated as part of
the M&S family.
We also aim to provide clear and
comprehensive disclosures and have
good regular dialogue with a wide range
of stakeholders. We proactively engaged
with shareholders on this matter ahead
of the 2025 AGM and consulted further
following the AGM to understand views.
Further information can be found on
pages 7 and 25 to 26.
Shareholder engagement is not limited
to the AGM season, and the Committee
welcomes open, two-way feedback and
conversation on all matters of
remuneration throughout the year.
CEO pay ratio
Given that the majority of our colleagues
are store based, with a significant number
working part-time, calculating a full-time
equivalent rate is complex. Under
Methodology B we use gender pay gap
data, which is readily available, to
identify the 25th, 50th and 75th
percentile of UK colleagues as at the
5April 2025 snapshot date. A full-time
equivalent total pay figure for 2025/26
isthen derived using the single figure
methodology for the three colleagues.
To ensure these are representative
colleagues, we have also analysed the
total pay of colleagues adjacent to them
in the data. No element of pay has been
omitted and the calculations follow the
same methodology as in the prior year.
The majority of our workforce are
Customer Assistants who are paid the
same hourly base rate. The three
colleagues selected for the CEO pay
ratio percentiles are all Customer
Assistants, so their pay is broadly similar,
with differences largely driven by
premiums and benefits choices. As a
result, total pay and benefits, and
therefore the ratios at the 25th and 50th
percentiles, are the same.
The CEO’s remuneration package is as
detailed in Figure 8 on page 83. The
decrease in the pay ratio this year is
attributable to no bonus being payable
for 2025/26. As the CEO’s pay includes
asignificant variable component, this
disproportionately impacts his total pay
outcome. Therefore, the pay ratio can
fluctuate year to year based on business
performance and incentive outcomes.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION REPORT CONTINUED
CEO pay ratio continued
Figure 6: CEO pay ratio
Year Methodology
25th percentile
ratio
50th percentile
ratio
75th percentile
ratio
2025/26 Option B 153:1 153:1 137:1
2024/25 Option B 294:1 261:1 252:1
2023/24 Option A 216:1 198:1 166:1
2022/23 Option A 131:1 120:1 102:1
2021/22 Option A 128:1 117:1 99:1
2020/21 Option A 55:1 50:1 42:1
2019/20 Option A 64:1 59:1 51:1
The Remuneration Committee considers the pay ratios alongside other reference points.
It believes the median pay ratio this year aligns with our pay, reward and progression
policies for UK colleagues, reflecting our pay for performance philosophy. The table
below outlines the base salary and total pay and benefits for the CEO and the 25th, 50th
and 75th percentile colleagues.
Figure 7: Salary and total remuneration used in the CEO pay ratio
calculations
Pay data
Salary
£000
Total pay
and benefits
1
£000
Salary
£000
Total pay
and benefits
2
£000
2024/25 2024/25 2025/26 2025/26
CEO remuneration 843 7,047 861 3,968
UK colleague 25th percentile 24 24 25 26
UK colleague 50th percentile 25 27 26 26
UK colleague 75th percentile 27 28 28 29
1 Updated to reflect value of PSP at time of vesting.
2 As detailed in Figure 8 on page 83, £3,054,882 of the CEO’s total package is from variable pay and
£1,408,898 is attributable to the share price increase on the 2023 PSP award. This reflects the
Company’s strong growth over the last three years and is aligned to the shareholder experience.
Gender pay gap
The M&S UK median pay gap
remained at 5.5%, and the mean
paygap is 10.8% (down from 12.2%
lastyear). We pay our colleagues
according to their role, regardless
oftheir gender. For example, all
Customer Assistants are paid the
same hourly base rate. However,
more men earn additional premiums
causing a positive gender pay gap.
A diverse, equitable and inclusive
M&Sis a critical enabler of the
higher-performance customer-centric
culture that we’re aiming for. With 70%
of our colleagues being women,
improving their representation and
experience remains central to our
DE&I strategy. Women account for
over half of our senior and store
leadership roles and over 70%
ofcolleagues on our future
leaderprogramme.
Progress highlights include:
•
Enhancing our parental leave
policies, doubling maternity and
adoption leave, tripling our
paternity leave and introducing
anew neo-natal leave policy.
•
Becoming accredited as a
Menopause Friendly Employer
withHenpicked.
•
Achieving the Employers for Carers
‘Carer Confident Accomplished’
benchmark.
We know there’s more to do and plan
to build further from this position of
strength with a particular focus in
areas and roles where women are less
well represented. Being close to
ourcolleagues and listening and
responding to the challenges
they’refacing will be key to this.
The full 2025 Gender Pay Gap
Reportcan be found at
corporate.marksandspencer.com.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION REPORT CONTINUED
Executive Directors’ remuneration
The table below sets out the total remuneration for 2024/25 and 2025/26 for each of our Executive Directors. The increase in M&S’ share price since the PSP was granted in July
2023 has had significant impact on the value of award, with £1,408,898 of the CEO’s 2023 PSP award being attributable to share price increase. This reflects the Company’s
strong growth over the last three years and is aligned to the shareholder experience.
Figure 8: Total single figure remuneration (audited)
Director Year
Salary
£000
Benefits
£000
Pension
1
£000
Bonus
£000
PSP
2
£000
Other
3
£000
Total
pay
£000
Total
fixed pay
£000
Total
variable pay
£000
% of total pay
generated by share
price appreciation
Stuart Machin 2025/26 861 0 52 — 3,055 0 3,968 913 3,055 36%
2024/25 843 0 51 1,635 4,518 0 7,047 894 6,153 38%
Alison Dolan 2025/26 600 0 72 — — 0 672 672 0 N/A
(from 6 January 2025) 2024/25 143 0 6 201 — 2,032 2,382 149 2,233 N/A
1 Stuart Machin and Alison Dolan are both members of the Your M&S Pension Savings Plan and participate on the same terms as all other colleagues. During the year, the CEO contributed 3% and the CFO
contributed 6% of salary into the plan, and the Company contributed 6% and 12% respectively.
2 The PSP vesting values for 2025/26 are based on a share price of £3.644 (the average share price from Q4 2025/26). The 2024/25 values have been restated based on the share price of £3.438 at time of PSP
vesting and to include the 2.6p dividend paid in July 2025.
3 In line with the approved Recruitment Policy, £714,840 of this figure relates to Alison Dolan’s 2024 Rightmove annual bonus that she forfeited on resigning; 40% was paid as cash and 60% has been deferred
into shares until March 2027. £1,317,340 reflects the face value of share awards granted to compensate her, on a fair value basis, for Rightmove share awards forfeited. The fair value was calculated to take
account of the original performance period and the estimated satisfaction of the performance conditions of the original awards. The vesting timelines are in line with the time horizons of the original awards.
Annual bonus
ABS 2025/26 (audited)
As disclosed earlier in the report, following discussions with the Executive Directors, it was jointly agreed that as a result of the cyber incident the Executive Directors’ bonus
scheme would not operate for the 2025/26 financial year. While Executive Directors continued to be measured against a scorecard of individual objectives aligned to the
strategic priorities set out earlier in this report, no financial payment will be made in respect of these achievements.
In reaching this decision, careful consideration was given to the exceptional commitment and leadership demonstrated by the management team during a period of significant
challenge, recognising that they worked harder than ever to successfully lead the business through such a difficult time. However, it was concluded that, in the circumstances,
and having particular regard to the experience of our shareholders, it would not be appropriate to make a bonus payment in respect of 2025/26.
The Committee believes that this approach supports our ambition to drive a high-performance culture and is consistent with our reward principle of linking pay to performance.
It also reinforces the alignment of our Executive Directors’ pay outcomes with the experience of shareholders.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION REPORT CONTINUED
Annual bonus continued
Figure 9: DSBP awards made in respect of 2024/25 (audited)
The table below shows DSBP awards granted to Executive Directors in the year.
Grant date
Basis
of award
Number
of shares
1,2
Face value
of award
£000
End of
deferral
period
Stuart Machin 07/07/2025 50% of
bonus
235,116 818 10/07/2028
Alison Dolan
3
07/07/2025 50% of
bonus
28,893 101 10/07/2028
1 Granted in the form of conditional shares, these awards vest after three years, subject to continued
employment as well as malus provisions.
2 The share price used to calculate the number of shares was the average share price on the five
dealing days prior to the date of grant (£3.476).
3 Alison was appointed as CFO on 6 January 2025 and her 2024/25 bonus was pro-rated for her period
of employment.
Performance Share Plan (PSP)
PSP awards made in 2025/26 (audited)
Three-year targets are set annually, taking into account the business strategy. As set
out in last year’s report, the Committee decided to delay target setting until the
impact of the cyber incident was determined and appropriately stretching but
realistic goals could be set. The Committee reviewed and approved the targets for
the 2025/26 PSP award, which were published on 11 December 2025 and can be seen
in Figure 10.
TSR is measured against a bespoke group of 13 companies, reviewed prior to grant
toensure the constituents remain appropriately aligned to M&S’ business operations.
Greggs and Pets at Home were added to the comparator group for the 2025/26
PSPawards.
The strategic targets are deemed too commercially sensitive to disclose but will be
reported at the time of vesting.
For the 2025 PSP, a grant of 250% of salary for the CEO and CFO was approved by the
Committee and was made on 7 July 2025. For financial measures, 20% of awards will
vest for threshold performance, increasing to 100% on a straight-line basis between
threshold and maximum performance. For strategic measures, no element of this
award shall vest if the targets are not achieved. This supports the Committee’s view
that delivery of these strategic measures is critical; payment for achievement below
the target would not be appropriate.
Figure 10: Performance conditions for PSP awards made in 2025/26
(audited)
2025 award measures Weighting Threshold Maximum
Adjusted EPS in 2027/28 30% 35.5p 43.3p
Adjusted ROCE in 2027/28 30% 15.8% 18.3%
Relative TSR
1
20% Median Upper quartile
Strategic measures 20% M&S.com growth
Food like-for-like sales growth
Operating cost to sales ratio
1 The comparator group for the TSR element of the 2025/26 PSP awards is: ASOS, B&M European,
Currys, Dunelm Group, Frasers, Greggs, JD Sports Fashion, J Sainsbury, Kingfisher, Next, Pets at
Home, Tesco and WHSmith.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION REPORT CONTINUED
Performance Share Plan (PSP) continued
Figure 11: PSP awards made in 2025/26 (audited)
Grant date
Basis of
award
% of salary
Threshold
level of
vesting
Number
of shares
1
Face value
of award
£000
2
End of
performance
period Vesting date
Stuart
Machin 07/07/2025 250% 20% 610,414 2,122 01/04/2028 10/07/2028
Alison
Dolan 07/07/2025 250% 20% 431,530 1,500 01/04/2028 10/07/2028
1 PSP grants were made as conditional share awards.
2 The face value of the awards granted was calculated by multiplying the average share price on the
five dealing days prior to the date of grant (£3.476) by the number of shares awarded.
Figure 12: PSP awards vesting in relation to 2025/26 (audited)
For Executive Directors in receipt of PSP awards granted in 2023, the awards will vest
in July 2026, based on three-year performance over the period to 28 March 2026. For
threshold performance, 20% of the 2023 award would vest, increasing to 100% on a
straight-line basis between threshold and maximum performance.
The Committee assessed performance over the period and determined that 78.8% of
the total award will vest. In reaching this decision, the Committee considered the
impact of the cyber incident and, having noted that this occurred only in the final
year of the three-year performance period, it determined that the vesting outturn
was fair and appropriate. The Committee was satisfied that the outcome is reflective
of the strong shareholder experience over the performance period, with M&S
delivering a TSR of 146% compared to 48% for the FTSE 100 index over the same
period. No discretion was applied to the formulaic vesting outcome and the
Committee was also satisfied that there were no windfall gains.
Details of performance against the specific targets set are shown in the table below.
The total vesting values shown in Figure 13 directly correspond to the figure included
in the single figure table (Figure 8) on page 83.
Final year
adjusted
EPS
Final year
adjusted
ROCE
Relative
TSR
Strategic measures
M&S.com
growth
Food
like-for-
like
sales
Operating
cost to
sales
ratio
Target and
weighting 30% 30% 20% 20%
Overall
vesting
Threshold
performance 16.7p 11.5% Median N/A N/A N/A
Maximum
performance 25.7p 14.0%
Upper
quartile 10.0% 2.5% 32.0%
Actual
performance
achieved 23.8p 13.0%
Above
upper
quartile -3.9% 9.8% 31.2%
Percentage
of maximum
award
achieved 25.0% 20.4% 20.0% 0.0% 6.7% 6.7% 78.8%
Figure 13: Value of PSP awards vesting in relation to 2025/26 (audited)
Number
of shares
granted
Outcome
achieved
%
Number of
shares
vesting
Dividend
equivalents
accrued
during the
performance
period
Value
attributable
to
share price
appreciation
£000
1
Total
PSP vesting
£000
Stuart Machin 1,039,501 78.8% 819,126 19,205 £1,409 £3,055
1 Calculated using the difference between the grant price of £1.924 and the average share price from
Q4 2025/26 of £3.644.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION REPORT CONTINUED
Figure 14: Proposed implementation of the Remuneration Policy in 2026/27
Element of
remuneration Implementation in 2026/27
Fixed pay The table below details the Executive Directors’ salaries as at
1July2025 and salaries which will take effect from 1 July 2026.
Theincrease awarded to Executive Directors is below the 6.4%
awarded to Customer Assistants and in line with the 5% pay review
budget for salaried colleagues and other senior management.
Annual salary
as of
1 July 2025
£000
Annual
salary
as of
1 July 2026
£000
Change in
salary
% increase
Stuart Machin 866 909 5%
Alison Dolan 600 630 5%
Both benefits and pension are in line with the wider colleague base
(as outlined in the Policy).
Annual bonus The Executive Directors are eligible to receive a bonus award of up
to 200% of salary.
Performance will be focused on M&S Group adjusted profit before
tax (70%). The remaining 30% will be measured against a scorecard of
individual objectives, identified as the measurable key priorities
required to drive the continued growth of M&S. Individual
performance will again be measured independently of PBT
performance and no individual element may be earned until a
threshold level of PBT is achieved.
The performance targets for the 2026/27 scheme are deemed by the
Board to be too commercially sensitive to disclose in this report but
will be disclosed next year.
Element of
remuneration Implementation in 2026/27
PSP The Committee approved a 250% of salary PSP award for the
Executive Directors in 2026. The Committee will review and
reconfirm this decision immediately prior to grant to ensure this
remains appropriate, particularly considering share price
performance.
During the year, the Committee reviewed the long-term incentive
framework at M&S, assessing the extent to which it remained
suitable. The 2026 PSP will maintain the measures and weightings
used for the 2025 PSP awards. The Committee believes in the
importance of strategically aligned incentives, so that Executive
Directors are motivated to deliver the M&S Reshaping for Growth
strategy. The Committee’s aim is to ensure realistic and sustainable
targets to support the delivery of such growth.
The performance conditions are set out in the table below. The
strategic targets are deemed too commercially sensitive to disclose
but will be reported at the time of vesting.
Performance conditions for PSP awards to be made in 2026/27
2026 PSP award measures Weighting
Threshold
(20% vesting)
Maximum
(100% vesting)
Final year adjusted EPS 30% 38.5p 47.1p
Final year adjusted ROCE 30% 16.3% 18.8%
Relative TSR
1
20% Median
Upper
quartile
Strategic measures 20% M&S.com growth
Food like-for-like sales
Operating cost to sales ratio
1 The comparator group for the TSR element remains unchanged from the
2025/26 PSP awards: ASOS, B&M European, Currys, Dunelm Group, Frasers,
Greggs, JD Sports Fashion, J Sainsbury, Kingfisher, Next, Pets at Home, Tesco
and WHSmith.
Shareholding
requirements
In line with the proposed policy set out on pages 71 to 80,
shareholding requirements will be increased for 2026/27 to 300% for
the CEO and 250% for other Executive Directors. Executive Directors
are required to maintain their minimum shareholding requirement,
or, if their level of shareholding is below this, their actual
shareholding, for two years after leaving M&S.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION REPORT CONTINUED
Figure 15: Executive Directors’ shareholdings (audited)
The table below sets out the total number of shares held by each Executive Director
serving on the Board during the period to 28 March 2026.
There have been no changes in the current Executive Directors’ interests in shares or
options granted by the Company and its subsidiaries between the end of the financial
year and 19 May 2026. No Executive Director had an interest in any of the Company’s
subsidiaries at the statutory end of the year.
With
performance
conditions
Without performance
conditions
Shares
owned
outright
1
PSP
2,5
DSBP
3,5
RSP
4,5
Stuart Machin 1,953,837 2,398,067 848,337 —
Alison Dolan 209,619 673,488 28,992 123,815
1 Includes shares owned by connected persons.
2 PSP awards were made as conditional share awards; the performance conditions have previously
been disclosed.
3 Awards under the DSBP were made as conditional share awards and relate to half of the annual
bonus earned in respect of 2022/23, 2023/24 and 2024/25, deferred into shares for three years.
4 Alison Dolan’s RSP awards were granted as conditional shares and replace awards that she forfeited
on resigning from Rightmove.
5 The figures in the table above include dividend equivalents that are accrued on share awards.
Figure 16: Shareholding requirements including post-cessation
(audited)
All Executive Directors are required to build a holding of shares equivalent in value to
a minimum percentage of their salary within a five-year period from their
appointment date. This is currently 250% of salary for the CEO and 200% of salary for
other Executive Directors. As detailed in the policy table on page 73 this requirement
will increase to 300% of salary for the CEO and 250% of salary for other Executive
Directors. Executive Directors are required to maintain their minimum shareholding
requirement, or, if their level of shareholding is below this, their actual shareholding,
for two years after leaving M&S.
The chart below shows the extent to which each Executive Director has met their
target shareholding as at 28 March 2026. For the purposes of the requirements, the
net number of unvested share awards not subject to performance conditions is
included and is reflected in the chart below. The Committee continues to keep
shareholding requirement guidelines and actual Executive Director shareholdings
under review and will take appropriate action should it consider it necessary.
Stuart Machin
Alison Dolan
Shares owned outright Unvested DSBP/RSP shares
The average share price from Q4 2025/26 of £3.644 has been used.
Figure 17: Executive Directors’ interests in the Company’s
share schemes (audited)
Maximum
receivable at
30 March 2025
Awarded
during
the year
Exercised
during
the year
1
Lapsed
during the
year
Dividend
equivalents
accrued
Maximum
receivable
at
28 March
2026
Stuart Machin
PSP 3,218,596 610,414 1,315,086 145,126 29,269 2,398,067
DSBP 1,013,307 235,116 409,934 — 9,848 848,337
RSP — — — — — —
Total 4,231,903 845,530 1,725,020 145,126 39,117 3,246,404
Alison Dolan
PSP 237,996 431,530 — — 3,962 673,488
DSBP — 28,893 — — 99 28,992
RSP 399,313 123,390 402,636 — 3,748 123,815
Total 637,309 583,813 402,636 — 7,809 826,295
1 The share price on the date of vesting for the PSP and DSBP awards was £3.39875.
Employee share schemes
All-employee share schemes (audited)
Executive Directors may participate in ShareSave, the Company SAYE scheme, and
ShareBuy, the Company’s SIP, on the same basis as all other eligible colleagues. The
Executive Directors do not currently participate in any all-employee share schemes.
Further details of the schemes are set out in note 13 of the financial statements on
pages 142 to 143.
Dilution of share capital by employee share plans
Awards granted under the Company’s SAYE scheme and discretionary share plans
can be met by the issue of new shares when the options are exercised or through
market purchase shares. The Company monitors the number of shares issued under
these schemes and their impact on dilution limits.
Figure 18: All share plans
(As at 28 March 2026)
Actual Limit
1,012%
176%
10%
7.94%
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION REPORT CONTINUED
Figure 19: Performance and CEO remuneration comparison
This graph illustrates the Company’s performance against the FTSE 100 over the past 10 years. The FTSE 100 has been selected as an appropriate comparison index as M&S
re-entered the FTSE 100 on 18 September 2023. The calculation of TSR is in accordance with the relevant remuneration regulations. The table below the TSR chart sets out
theremuneration data for Executive Directors undertaking the role of CEO during each of the last 10 financial years.
CEO
CEO single figure
(£000)
Stuart Machin — — — — — — 2,708 5,092 7,047 3,968
Steve Rowe 1,642 1,123 1,517 1,205 1,068 2,630 156 — — —
Annual bonus
payment
(% of maximum)
Stuart Machin — — — — — — 81.1% 96.0% 97.0% —
Steve Rowe 37.0% 0.0% 0.0% 0.0% 0.0% 95.0% — — — —
PSP vesting
(% of maximum)
Stuart Machin — — — — — — 51.0% 90.0% 90.0% 78.8%
Steve Rowe 0.0% 8.2% 34.0% 11.2% 0.0% 0.0% 51.0% — — —
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26
02/04/16 01/04/17 31/03/18 30/03/19 28/03/20 03/04/21 02/04/22 01/04/23 30/03/24 29/03/25 28/03/26
250
200
150
100
50
0
FTSE 100 index Marks and Spencer Group plc
£
Marks and Spencer Group plc Annual Report and Financial Statements 202688
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION REPORT CONTINUED
Figure 20: Percentage change in directors’ remuneration
2025/26 2024/25 2023/24 2022/23 2021/22
% change 2024/25–2025/26 % change 2023/24–2024/25 % change 2022/23–2023/24 % change 2021/22–2022/23 % change 2020/21–2021/22
Base
salary/
fees Benefits
4
Annual
bonus
Base
salary/
fees Benefits
Annual
bonus
Base
salary/
fees Benefits
Annual
bonus
Base
salary/
fees Benefits
Annual
bonus
Base
salary/
fees Benefits
Annual
bonus
Stuart Machin
1
2% — (100%) 3% (43%) 4% 3% 12.5% 21% — — — — — —
Alison Dolan
1
— — (100%) — — — — — — — — — — — —
Archie Norman
2
3% — — 3% 100% — 3% — — 3% (100%) — 1% 100% —
Tamara Ingram
2
3% — — 3% — — 3% — — 3% — — 1% — —
Sapna Sood
2
3% — — 3% — — 3% — — 3% — — 1% — —
Evelyn Bourke
2
3% — — 3% — — 3% — — 3% (100%) — 1% — —
Fiona Dawson
2
3% — — 3% — — 3% — — 3% — — 1% — —
Cheryl Potter
2
3% — — 3% — — 3% — — — — — — — —
Roger Burnley
2,3
— — — — — — — — — — — — — — —
Sean Doyle
2,3
— — — — — — — — — — — — — — —
UK M&S colleagues
(average FTE) 5% — (100%) 9.4% 9.8% 5.5% 8.5% 17% 23% 6% — (6%) 2% — 100%
1 See Figure 8 on page 83 for details of Executive Director remuneration which support the percentage changes above. Alison Dolan joined the Board on 6 January 2025 and did not receive a salary increase
during the 2025/26 financial year.
2 See Figure 24 on pages 90 and 91 for details of Non-Executive Director remuneration which support the percentage changes above.
3 Roger Burnley and Sean Doyle joined M&S on 1 December 2025.
4 No changes were made to benefits during the year. The change in benefit is blank where the benefit value was zero in the prior year as there is no figure to compare to.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION REPORT CONTINUED
Figure 21: Relative importance of spend on pay
The table below illustrates the Company’s expenditure on total pay for all colleagues
across the Group and distributions to shareholders by way of dividend payments and
share buyback. M&S Group adjusted profit before tax has been used as a comparison,
as this is the key financial metric thatthe Committee considers when assessing
Company performance.
2024/25
£m
2025/26
£m % change
Total colleague pay 2,168.6 2,444.7 13%
Total returns to shareholders 60.5 77.0 27%
M&S Group adjusted profit before tax
1
875.5 671.4 -23%
1 M&S Group adjusted profit before tax as disclosed on page 1.
Figure 22: Service agreements
In line with our Policy, Executive Directors have rolling contracts which may be
terminated by the Company or the Executive Director giving notice as detailed
inthetable below:
Date of appointment Notice period
Stuart Machin 25/05/2022 12 months/6 months
Alison Dolan 06/01/2025 6 months/6 months
Figure 23: CFO recruitment arrangements
As detailed in last year’s report, Alison Dolan received replacement share awards to
compensate her for share awards forfeited by leaving Rightmove. This included
Alison’s 2024 Rightmove bonus, of which 60% was deferred into shares. These shares
were granted in July 2025 and will vest in March 2027. The value of this award was
reported in the single figure table in respect of 2024/25.
Face value of award
£000
1,2
Vesting date
Alison Dolan 429 25/03/2027
1 The share price used to calculate the awards was £3.476, being the five-day average share price
immediately preceding the date of grant.
2 Dividend equivalents will be paid on the vesting date based on the number of vested shares.
External appointments
Executive Directors may hold external appointments outside M&S with the approval
of the Board and provided these do not give rise to any conflicts with their duties to
the Company. Fees earned from such appointments may be retained by the Director.
During the year, Alison Dolan served as a non-executive director of Pearson plc. Fees
in respect of this role amounted to £95,000 for the year ended 31 December 2025.
Payments for loss of office 2025/26 (audited)
There were no payments for loss of office.
Payments to past directors during 2025/26 (audited)
Katie Bickerstaffe’s unvested conditional shares awarded under the 2023 PSP were
pro-rated for time to 10 July 2024. In line with other participants, 78.8% of her 2023
PSP awards will vest in July 2026. After pro-ration, 261,976 shares will vest at an
estimated value of £954,641. Valuations for Katie’s PSP vesting awards are based
onashare price of £3.644 (the average share price in Q4 2025/26).
Figure 24: Non-Executive Directors’ total single figure
remuneration (audited)
Fees for Non-Executive Directors are reviewed annually at M&S. Non-Executive Directors
receive fees reflecting the time commitment, demands and responsibilities of the role.
Fees paid to the Non-Executive Directors and Board Chairman for 2025/26 and
2024/25 are detailed in Figure 24.
Benefits include expense reimbursements relating to travel, accommodation and
subsistence in connection with attendance at Board and Committee meetings during
the year, which are deemed by HMRC to be taxable. The amounts in the following
table are the taxable expenses that the Company grossed up and paid the UK tax on
for the Non-Executive Directors. Non-taxable expense reimbursements have not
been included in the table.
In line with pay increases for salaried colleagues, Non-Executive Director fees will
increase by 5% to £85,340 with effect from 1 July 2026. The Board Chairman was also
awarded an increase of 5%, bringing the total aggregate fee to £730,342.
No change was made to the SID fee of £31,000, the fee of £20,000 for chairing or the
£5,000 fee for attending a Committee.
Following the FRC’s publication of its revised guidance on non-executive director
remuneration in November 2025, a review of this fee structure will be undertaken
during the year. Fees for Non-Executive Directors are determined by the Executive
Directors and the Chairman, and the Chairman’s fee is determined by the Remuneration
Committee. Any changes will be disclosed in the 2026/27 annual report.
Marks and Spencer Group plc Annual Report and Financial Statements 202690
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION REPORT CONTINUED
Figure 24: Non-Executive Directors’ total single figure
remuneration (audited) continued
Director Year
Fees
£000
Benefits
£000
Total
£000
Archie Norman 2025/26 690 2 692
2024/25 670 2 672
Justin King 2025/26 39 0 39
(until 10 September 2025) 2024/25 82 0 82
Tamara Ingram 2025/26 106 0 106
2024/25 102 0 102
Sapna Sood 2025/26 86 0 86
2024/25 82 0 82
Evelyn Bourke 2025/26 101 0 101
2024/25 98 0 98
Fiona Dawson 2025/26 132 0 132
2024/25 108 0 108
Ronan Dunne 2025/26 57 0 57
(until 1 December 2025) 2024/25 82 0 82
Cheryl Potter 2025/26 86 0 86
2024/25 82 0 82
Roger Burnley 2025/26 29 0 29
(joined 1 December 2025) 2024/25 — — —
Sean Doyle 2025/26 29 0 29
(joined 1 December 2025) 2024/25 — — —
Figure 25: Non-Executive Directors’ shareholdings (audited)
The Non-Executive Directors are not permitted to participate in any of the Company’s
incentive arrangements. All Non-Executive Directors are required to build and
maintain a shareholding of at least 2,000 shares in the Company upon joining M&S.
Details are shown in the table below.
There were no changes in the current Non-Executive Directors’ interests in shares in the
Company and its subsidiaries between the end of the financial year and 19 May 2026.
Director
Number of shares held
as at 28 March and 19 May 2026
1
Archie Norman 148,600
Justin King
2
64,000
Tamara Ingram 2,000
Sapna Sood 2,000
Evelyn Bourke 50,000
Fiona Dawson 28,004
Ronan Dunne
2
25,000
Cheryl Potter 100,000
Roger Burnley 2,800
Sean Doyle 2,526
1 Includes shares owned by connected persons.
2 Shareholdings for Justin King and Ronan Dunne are shown at the time of stepping down from the
Board, 10 September 2025 and 1 December 2025 respectively.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 91
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
REMUNERATION REPORT CONTINUED
Figure 26: Non-Executive Directors’ agreements for service
Non-Executive Directors have an agreement for service for an initial three-year term
which can be terminated by either party giving three months’ notice (or six months’
notice for the Chairman).
As announced in October 2025, Archie Norman’s tenure as Chairman has been
extended for the next phase of the M&S Reshaping for Growth strategy. This will take
his tenure beyond the nine years set out in the UK Corporate Governance Code.
However, the Board is unanimous in its conviction that his continuation as Chairman
is in the best interests of the Company, having noted strong shareholder support for
this view. The extension of his term will last for three years from September 2026, but
will be subject to a comprehensive annual review, and no major change of
circumstances. Further information is on page 56.
The table below sets out the terms for all current members of the Board.
Director Date of appointment Notice period
Archie Norman 01/09/2017 6 months/6 months
Tamara Ingram 01/06/2020 3 months/3 months
Sapna Sood 01/06/2020 3 months/3 months
Evelyn Bourke 01/02/2021 3 months/3 months
Fiona Dawson 25/05/2021 3 months/3 months
Cheryl Potter 01/03/2023 3 months/3 months
Roger Burnley 01/12/2025 3 months/3 months
Sean Doyle 01/12/2025 3 months/3 months
Remuneration Committee advisers
During the year, the Committee received advice on remuneration matters from PwC.
PwC was appointed by the Committee as its independent adviser in 2014, following a
rigorous and competitive tender process.
PwC is a founding member of the Remuneration Consultants Group and voluntarily
operates under the code of conduct in relation to executive remuneration consulting
in the UK.
The Committee regularly reflects on the quality and objectivity of this advice and is
satisfied that any conflicts are appropriately managed. PwC’s advisory team has no
connection with any individual director of the Group.
During the year, PwC charged £70,750 for Remuneration Committee matters. This is
based on an agreed fee for business-as-usual support, with additional work charged
at hourly rates. PwC also provided the Company with assurance, tax, and consulting
advice during the financial year.
The Committee also seeks internal support from the CEO, CFO, General Counsel &
Company Secretary, Chief People Officer, and the Head of Executive Reward as
necessary. All may attend Committee meetings by invitation but are not present for
any discussions that relate directly to their own remuneration.
Shareholder support for the Remuneration Policy and
2024/25 Directors’ Remuneration Report
At the AGM on 1 July 2025, 95.07% of shareholders voted in favour of the advisory
resolution to approve the Directors’ Remuneration Report for 2024/25. The Committee
believes this illustrates the strong level of shareholder support for the senior
remuneration framework. Figure 27 below shows full details of the voting outcomes
for the 2024/25 Directors’ Remuneration Report and Remuneration Policy (voted on
at the 2023 AGM).
Figure 27: Voting outcomes for the Remuneration Policy and 2024/25
Remuneration Report
Votes for % votes for Votes against % votes against Votes withheld
Remuneration
Policy (at the
2023 AGM) 1,286,748,793 97.74 29,785,038 2.26 261,392
2024/25
Remuneration
Report (at the
2025 AGM) 1,293,591,998 95.07 67,029,977 4.93 366,446
Approved by the Board
Fiona Dawson
Chair of the Remuneration Committee
19 May 2026
The Remuneration Policy and this Remuneration Report have been prepared in
accordance with the relevant provisions of the Companies Act 2006 and on the basis
prescribed in the Large and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013 (the Regulations). Where required, data has
been audited by our external auditor, Deloitte, and this is indicated appropriately.
Marks and Spencer Group plc Annual Report and Financial Statements 202692
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
OTHER DISCLOSURES
Directors’ Report
Marks and Spencer Group plc (the Company) is the holding company of the
Marksand Spencer Group of companies (the Group).
The Directors’ Report for the year ended 28 March 2026 comprises pages 49 to 98 and
pages 201 to 202 of this report, together with the sections of the Annual Report
incorporated by reference. The Strategic Report and the Directors’ Report together
form the Management Report for the purposes of the Disclosure Guidance and
Transparency Rules (DTR) 4.1.8R.
As permitted by legislation, some of the matters required to be included in the
Directors’ Report have instead been included elsewhere in the Annual Report and are
incorporated by reference. Specifically, these are:
•
Matters the Board considers are of strategic importance including future business
developments (throughout the Strategic Report on pages 1 to 48).
•
Risk management on pages 41 to 42.
•
Information on how the directors have had regard for the Company’s stakeholders,
and the effect of that regard, on pages 6 to 9.
•
Information relating to financial instruments on pages 153 to 165.
•
Our approach to social, environmental and ethical matters, and our SECR
disclosures, in our ESG Committee Report on pages 58 to 59, our ESG Review and
TCFD Report on pages 27 to 39, and our ESG Report available online at corporate.
marksandspencer.com/ESGreport2026.
Other information to be disclosed in the Directors’ Report is given in this section.
The Directors’ Report fulfils the requirements of the Corporate Governance
Statement for the purposes of DTR 7.2.3R. The Company’s full Corporate Governance
Statement is available online at corporate.marksandspencer.com/about-us/
corporate-governance.
Both the Strategic Report and the Directors’ Report have been drawn up and are
presented in accordance with, and in reliance upon, applicable English company law.
The liabilities of the directors in connection with those reports shall be subject to the
limitations and restrictions provided by such law.
Information to be disclosed under UKLR 6.6.1R
Listing Rule Detail Page reference
UKLR 6.6.1R (1) (2)
(4-10) (13)
Not applicable N/A
UKLR 6.6.1R (11)
(12)
Waiver of dividends Note 13
UKLR 6.6.1R (3) Long-term incentive schemes 67-68, 69-70, 84-87
Board of directors
The membership of the Board and biographical details of the directors are on pages
51 to 52. Changes to the directors during the year and up to the date of this report are
set out below.
Name Effective date of appointment/departure
Departures
Justin King 10 September 2025
Ronan Dunne 1 December 2025
Appointments
Roger Burnley 1 December 2025
Sean Doyle 1 December 2025
The appointment and replacement of directors is governed by the Company’s
Articles of Association (the Articles), the UK Corporate Governance Code, the
Companies Act 2006 and related legislation. Under the Articles, any such director
shall hold office only until the next Annual General Meeting (AGM) where they will
stand for annual election.
The Articles may be amended by a special resolution of the shareholders. Subject to
the Articles, the Companies Act 2006 and any directions given by special resolution,
the business of the Company will be managed by the Board which may exercise all of
the powers of the Company.
Details of directors’ beneficial and non-beneficial interests in the shares of the
Company are shown on pages 87 and 91. Options granted to directors under the Save
As You Earn (SAYE) and Executive Share Option Schemes are shown on page 87.
Further information about employee share option schemes is in note 13 to the
financial statements on pages 142 to 143.
The Company may, by ordinary resolution, declare dividends not exceeding the
amount recommended by the Board. Subject to the Companies Act 2006, the Board
may pay interim dividends and also any fixed rate dividend, whenever the financial
position of the Company, in the opinion of the Board, justifies its payment.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 93
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Directors’ Report continued
Numerical diversity data
Our gender identity and ethnicity data in accordance with UKLR 6.6.6R (10) as at
28March 2026 is set out below. Board and Executive Committee (ExCo) members are
asked to complete a diversity disclosure to confirm which of the categories set out
below they identify with.
Gender identity
Number of
Board
members
% of the
Board
Number of
senior
positions on
the Board
(CEO, CFO,
SID and
Chair)
Number
in E x Co * % of ExCo *
Men 4 40 2 7 78
Women 6 60 2 2 22
Not specified/prefer not to say — — — — —
Ethnic background
Number of
Board
members
% of the
Board
Number of
senior
positions on
the Board
(CEO, CFO,
SID and
Chair)
Number
in E x Co * % of ExCo *
White British or other White
(including minority-white groups) 9 90 4 8 89
Mixed/Multiple ethnic groups — — — 1 11
Asian/Asian British 1 10 — — —
Black/African/Caribbean/
BlackBritish — — — — —
Other ethnic group — — — — —
Not specified/prefer not to say — — — — —
* ExCo members are the ‘executive management’ of the Company.
Directors’ conflicts of interest
The Company has procedures in place for managing conflicts of interest. All directors
are required to avoid situations in which they have, or could have, a direct or indirect
interest that conflicts, or possibly may conflict, with the interests of the Company.
Should a director become aware that they, or any of their connected parties, have an
interest in an existing or proposed transaction with the Company or its subsidiaries,
they are expected to notify the Board in writing or at the next Board meeting. Internal
controls are in place to ensure that any related party transactions involving directors,
or their connected parties, are conducted on an arm’s length basis. Directors have a
continuing duty to update any changes to these conflicts.
Directors’ indemnities
The Company maintains directors’ and officers’ liability insurance which provides
appropriate cover for legal action brought against its directors and officers. The Company
has also granted indemnities to each of its directors and the Company Secretary to
the extent permitted by law. Qualifying third-party indemnity provisions (as defined
by Section 234 of the Companies Act 2006) were in force during the year ended
28March 2026. They remain in force in relation to certain losses and liabilities which
the directors (or Company Secretary) may incur to third parties in the course of
acting as directors or Company Secretary or employees of the Company or of any
associated company. Qualifying pension scheme indemnity provisions (as defined by
Section 235 of the Companies Act 2006) were in force during the course of the financial
year ended 28 March 2026 for the benefit of the Trustees of the Marks & Spencer UK
Pension Scheme, both in the UK and the Republic of Ireland.
Profit and dividends
The profit for the financial year, after taxation, amounts to £236.2m (last year: £291.9m).
The directors have declared dividends as follows:
Dividends on ordinary shares
2026
per share £m
2025
per share £m
Paid interim dividend 1.2p 24.6 1.0p 20.3
Proposed final dividend 3.0p 62.0 2.6p 52.4
Total dividend 4.2p 86.6 3.6p 72.7
Subject to shareholder approval at this year’s AGM, the final dividend will be paid on
10 July 2026 to shareholders whose names were on the Register of Members at close
of business on 5 June 2026.
OTHER DISCLOSURES CONTINUED
Marks and Spencer Group plc Annual Report and Financial Statements 202694
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Directors’ Report continued
Share capital
The Company’s issued ordinary share capital as at 28 March 2026 comprised a single
class of ordinary share. Each share carries the right to one vote at general meetings
of the Company.
During the financial year, 10,308,429 ordinary shares in the Company were issued
under the terms of the Company’s SAYE Share Option Scheme. 46,533 shares were
issued at a price of 82p, 1,778,350 shares at a price of 189p, 8,346,933 shares at a price
of 99p, 110,060 shares at a price of 204p, and 26,553 shares at a price of 303p.
Details of movements in the Company’s issued share capital can be found in note 24
to the financial statements on page 167.
Restrictions on transfer of securities
There are no specific restrictions on the transfer of securities in the Company, which
are governed by its Articles and prevailing legislation. The Company is not aware of
any agreements between holders of securities that may result in restrictions on the
transfer of securities or that might result in restrictions on voting rights.
Variation of rights
Subject to applicable statutes, rights attached to any class of share may be varied
with the written consent of the holders of at least three-quarters in nominal value of
the issued shares of that class, or by a special resolution passed at a separate general
meeting of the shareholders.
Rights and obligations attaching to shares
Subject to the provisions of the Companies Act 2006, any resolution passed by the
Company and other shareholders’ rights, shares may be issued with such rights and
restrictions as the Company may by ordinary resolution decide, or (if there is no such
resolution or so far as it does not make specific provision) as the Board may decide.
Powers for the Company issuing or buying back its own shares
The Company was authorised by shareholders at the 2025 AGM to purchase in the
market up to 10% of its issued share capital, as permitted under the Company’s
Articles. No shares were bought back under this authority during the year ended
28March 2026 and up to the date of this report. This standard authority is renewable
annually; the directors will seek to renew it at the 2026 AGM.
The directors were granted authority at the 2025 AGM to allot relevant securities up to
a nominal amount of £6,853,821.93. This authority will apply until the conclusion of the
2026 AGM. At this year’s AGM, shareholders will be asked to grant an authority to allot
relevant securities (i) up to a nominal amount of £6,887,609.21 and (ii) comprising
equity securities up to a nominal amount of £13,775,218.42 (after deducting from such
limit any relevant securities allotted under (i)), in connection with a pre-emptive offer
(the Section 551 amount), such Section 551 amount to apply until the conclusion of the
AGM to be held in 2027 or on 1 October 2027, whichever is sooner.
At the 2025 AGM, two separate special resolutions were passed empowering the
directors to allot equity securities for cash without first offering them to existing
shareholders in proportion to their existing holdings. A special resolution will be
proposed at the 2026 AGM to renew the directors’ powers – in line with the latest
institutional shareholder guidelines – to make non-pre-emptive issues for cash only
and otherwise up to a nominal amount of £2,066,282.76. In addition, a separate
special resolution will be proposed to authorise directors to make non-pre-emptive
issues for cash in connection with acquisitions or specified capital investments, up to
a further nominal amount of £2,066,282.76. In both cases an additional follow-on
offer, up to a nominal amount equal to 20% of any allotment made under either
special resolution, can be made to existing holders of securities not allocated shares
under the allotment, as envisaged by paragraph 3 of Section 2B of the Statement of
Principles on Disapplying Pre-Emption Rights issued by the Pre-Emption Group in
November 2022.
A special resolution will also be proposed to renew the directors’ authority to
repurchase the Company’s ordinary shares in the market. The authority will be limited
to a maximum of 206,628,276 ordinary shares and sets the minimum and maximum
prices which would be paid.
Deadlines for exercising voting rights
Votes are exercisable at a general meeting of the Company in respect of which the
business being voted upon is being heard. Votes may be exercised in person, by proxy
or, in relation to corporate members, by corporate representatives. The Articles
provide a deadline for submission of proxy forms of not less than 48 hours before the
time appointed for the holding of the meeting or adjourned meeting. However, when
calculating the 48-hour period, the directors can, and have, decided not to take
account of any part of a day that is not a working day.
Significant agreements – change of control
There are a number of agreements to which the Company is party that take effect,
alter or terminate upon a change of control of the Company following a takeover bid.
Details of the significant agreements of this kind are as follows:
•
The $300m US Notes issued by the Company to various institutions on 6 December 2007
under Section 144a of the US Securities Act contain an option such that, upon a
change of control event, combined with a credit ratings downgrade, any holder of
such a US Note may require the Company to prepay the principal amount of that
US Note.
OTHER DISCLOSURES CONTINUED
Marks and Spencer Group plc Annual Report and Financial Statements 2026 95
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Directors’ Report continued
Significant agreements – change of control continued
•
The £250m Medium-Term Notes (MTN) issued by the Company’s wholly owned
subsidiary, Marks and Spencer plc (M&S plc), on 10 July 2019 (current outstanding
£56.7m) and the £300m MTN issued by M&S plc on 18 February 2026 to various
institutions under the Group’s £3bn Euro Medium-Term Note programme contain
an option such that, upon a change of control event, combined with a credit ratings
downgrade to below sub-investment level, any holder of an MTN may require M&S
plc to prepay the principal amount of that MTN.
•
The £850m Credit Agreement dated 12 December 2025 between M&S plc and various
banks contains a provision such that, upon a change of control event, unless new
terms are agreed within 60 days, the facility under this agreement will be cancelled
with all outstanding amounts becoming immediately payable with interest.
The Company does not have agreements with any director or employee that would
provide compensation for loss of office or employment resulting from a takeover
except that provisions of the Company’s share schemes and plans may cause options
and awards granted to employees under such schemes and plans to vest on a takeover.
Interests in voting rights
Information provided to the Company pursuant to the Financial Conduct Authority’s
DTRs is published on a Regulatory Information Service and on the Company’s
website. As at 28 March 2026, and up to the date of this report, the following
information has been received, in accordance with DTR 5, from holders of notifiable
interests in the Company’s issued share capital.
The information provided below was correct at the date of notification; however, the date
it was received may not have been within the current financial year. It should be noted
that these holdings are likely to have changed since the Company was notified. However,
notification of any change is not required until the next notifiable threshold is crossed.
Notifiable interests % of capital disclosed Date notified
Schroders plc 4.760152 20 September 2023
BlackRock, Inc 6.22 26 November 2024
Ameriprise Financial, Inc 4.978 7 March 2024
RWC Asset Management LLP 4.937 12 February 2024
Norges Bank 3.250110 28 April 2026
Branches
In accordance with the Companies Act 2006 and the DTRs, the Group discloses below
the subsidiary companies that have branches outside the UK:
Marks and Spencer plc: Isle of Man and Sri Lanka.
Marks and Spencer (Shanghai) Limited: Dongguan.
Colleague involvement
We remain committed to colleague involvement and engagement throughout the
business. Examples of this, and information on our approach to our workforce, are
highlighted throughout this Annual Report and specifically on pages 5 to 7, 25 to 26,
54, and 81 to 82.
Share schemes are a long-established and successful part of colleagues’ total reward
packages, encouraging and supporting employee share ownership. The Company
operates both an all-employee SAYE Scheme and a Share Incentive Plan. As at
28March 2026, 13,873 colleagues were participating in the Company’s SAYE Scheme.
Full details of all schemes are on pages 142 to 143.
There are websites for both pension schemes – the defined contribution scheme
(Your M&S UK Pension Saving Plan) and the defined benefit scheme (the Marks & Spencer
UK Pension Scheme) – which are fully accessible to colleagues and former colleagues
who have retained benefits in either scheme. Colleagues are updated as needed with
any pertinent information on their pension savings.
Equal opportunities
Creating a diverse, inclusive and equitable M&S is integral to building a high-performance,
customer-centric culture. We aim to foster an environment in which all colleagues
feel safe, respected and able to thrive, and where everyone has the opportunity to
contribute to the success of the business.
We do not tolerate discrimination, harassment, bullying or victimisation in any form.
We have Group-wide policies and processes in place to support fair treatment
throughout the colleague lifecycle, including recruitment, development, promotion
and reward.
Our inclusion efforts are supported by our colleague inclusion networks, senior
leadership oversight and clear KPIs.
More information on our inclusion and diversity initiatives can be found on pages 25 to 26 and 57.
Employees with disabilities
The Company is committed to supporting colleagues and candidates with both
visible and non-visible disabilities, accessibility needs and health conditions.
Where appropriate, reasonable adjustments are made to support colleagues to
perform their roles effectively. Decisions relating to recruitment, training,
development and career progression are based on skills and capability, with
appropriate support in place.
We continue to develop our long-term accessibility approach, supported by our
membership with Business Disability Forum, including stronger process and
improved guidance to support an inclusive and accessible working environment
across the group.
We continue to proudly offer workplace opportunities through our Marks and Start
scheme in partnership with The King’s Trust.
OTHER DISCLOSURES CONTINUED
Marks and Spencer Group plc Annual Report and Financial Statements 202696
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Directors’ Report continued
Research and development
Research and innovation remain key to our Food and Fashion, Home & Beauty offers,
enabling the development of better products. Further information is available on our
corporate website, corporate.marksandspencer.com, and in our ESG Report 2026.
Groceries Supply Code of Practice
The Groceries (Supply Chain Practices) Market Investigation Order 2009 (the Order) and
The Groceries Supply Code of Practice (the Code) impose obligations on M&S regarding
its relationships with its suppliers of groceries. Under the Order and Code, M&S is required
to submit an annual compliance report to the Audit & Risk Committee for approval and
then to the Competition and Markets Authority and Groceries Code Adjudicator (GCA).
M&S submitted its report, covering the period from 30 March 2025 to 28 March 2026,
to the Audit & Risk Committee on 7 May 2026. It was approved on 14 May 2026.
In accordance with the Order, a summary of that compliance report is set out below.
M&S believes that it has materially complied with the Code and the Order during the
relevant period. No formal disputes under the Code have arisen during the reporting
period. There have been 11 instances where suppliers have either alleged a breach or
made a reference to potential non-compliance with the Code. M&S has worked with
the suppliers to address the issues raised and nine of them havebeen resolved or
closed, with two issues remaining open but with resolutions inprogress.
A detailed summary of the compliance report is available on our website:
corporate.marksandspencer.com.
Anti-bribery and corruption
Our Anti-Bribery & Corruption (ABC) Policy sets the expected standards of conduct
for all colleagues, contractors, suppliers, business partners and any other third
parties who act for or on behalf of M&S. Our programme includes detailed
procedures and controls around giving and receiving gifts, hospitality and
entertainment; procedures for engaging new suppliers and partners, specifically
those who are based in higher-risk jurisdictions; standard contract clauses; and clear
reporting channels, including confidential reporting.
All colleagues are required to undertake mandatory ABC e-learning. Failure to comply
with the ABC Policy may result in disciplinary action, up to and including dismissal. Any
potential incidents reported internally, or to the external confidential reporting channels,
are followed up and, where appropriate, formally investigated. All investigations are
subsequently reported to the Audit & Risk Committee. Annual Bribery Risk Assessments
are conducted with outcomes also reported to the Committee.
Political donations
The Company did not make any political donations or incur any political expenditure
during the year ended 28 March 2026. M&S has a policy of not making donations to
political organisations or independent election candidates or incurring political
expenditure anywhere in the world as defined in the Political Parties, Elections and
Referendums Act 2000.
Going concern
In adopting the going concern basis for preparing the financial statements, the
directors have considered the business activities as set out on pages 10 to 14, the
financial position of the Group, its cash flows, liquidity position and borrowing
facilities as set out in the Financial Review on pages 16 to 24, the Group’s financial risk
management objectives and exposures to liquidity and financial risks as set out in
note 21 to the financial statements, as well as the principal risks and uncertainties as
set out on pages 43 to 47.
Based on the Group’s cash flow forecasts, the Board expects the Group to have adequate
resources to continue in operation, meet its liabilities as they fall due, retain sufficient
available cash and not breach the covenant under its revolving credit facility for the
foreseeable future, being a period of at least 12 months from the approval of the
financial statements. The Board therefore considers it appropriate for the Group to
adopt the going concern basis in preparing its financial statements.
See note 20 to the financial statements for more information on our facilities.
Long-term viability statement
The directors have assessed the prospects of the Company over a three-year period
to March 2029. This has taken into account the business model, strategic aims, risk
appetite, and principal risks and uncertainties, along with the Company’s current
financial position. Based on this assessment, the directors have a reasonable
expectation that the Company will be able to continue in operation and meet its
liabilities as they fall due over the three-year period under review.
See our approach to assessing long-term viability on page 48.
Auditor
Resolutions to reappoint Deloitte LLP as auditor of the Company and to authorise the
Audit & Risk Committee to determine its remuneration will be proposed at the 2026 AGM.
Annual General Meeting
The AGM of Marks and Spencer Group plc will be a digitally-enabled meeting,
broadcast from M&S’ Waterside House Support Centre on 7 July 2026 at 11am.
Shareholders are invited to engage with the AGM electronically via our dedicated
Lumi AGM website: https://meetings.lumiconnect.com/100-348-343-158. If a
shareholder wishes to attend the AGM in person as part of our studio audience, they
are requested to register their intention to do so in advance, to help manage capacity
on the day. The Notice of Meeting is given, together with explanatory notes and
guidance on how to join the meeting and vote, on pages 190 to 200.
OTHER DISCLOSURES CONTINUED
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Directors’ Report continued
Directors’ responsibilities
The Board is of the view that the Annual Report should be truly representative of the
year and provide shareholders with the information necessary to assess the Group’s
position, performance, business model and strategy.
The Board requested that the Audit & Risk Committee review the Annual Report and
provide its opinion on whether the report is fair, balanced and understandable. The
Audit & Risk Committee’s opinion is on page 61.
The directors are also responsible for preparing the Annual Report, the Remuneration
Report and Policy and the financial statements in accordance with applicable law and
regulations. Company law requires the directors to prepare financial statements for
each financial year. Under that law the directors are required to prepare the Group
financial statements in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and International
Financial Reporting Standards (IFRS) as adopted by the UK. Under company law, the
directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group and the Company and
of the profit or loss of the Group and the Company for that period.
In preparing these financial statements, the directors are required to:
•
Select suitable accounting policies and then apply them consistently.
•
Make judgements and accounting estimates that are reasonable and prudent.
•
State whether applicable IFRS (as adopted by the UK) have been followed, subject
to any material departures disclosed and explained in the financial statements.
•
Prepare the financial statements on a going concern basis unless it is inappropriate
to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the Company and enable
them to ensure the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Group and the Company and
for taking reasonable steps to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the Company’s
website. Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Each of the current directors, whose names and functions are listed on pages 51 to 52,
confirms that, to the best of their knowledge:
•
The Group financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the undertakings included in the
consolidation taken as a whole.
•
The Management Report includes a fair review of the development and
performance of the business and the position of the Company and the undertakings
included in the consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face.
•
The Annual Report, taken as a whole, is fair, balanced and understandable, and
provides the necessary information for shareholders to assess the Group’s position,
performance, business model and strategy.
Disclosure of information to auditor
Each of the persons who is a director at the time when this Directors’ Report is
approved confirms that, so far as they are aware, there is no relevant audit information
of which the Company’s auditor is unaware. They also confirm that they have taken all
the steps that they ought to have taken as a director to make themselves aware of any
relevant audit information and to establish that the Company’s auditor is aware of
thatinformation.
The Directors’ Report was approved by a duly authorised Committee of the Board
of Directors on 19 May 2026 and signed on its behalf by:
Nick Folland
General Counsel & Company Secretary
London, 19 May 2026
OTHER DISCLOSURES CONTINUED
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF MARKS AND SPENCER GROUP PLC
Report on the audit of the financial statements
1. Opinion
In our opinion:
•
the financial statements of Marks and Spencer Group plc (the ‘Parent Company’)
and its subsidiaries (the ‘Group’) give a true and fair view of the state of the
Group’s and of the Parent Company’s affairs as at 28 March 2026 and of the
Group’s profit for the 52 weeks then ended;
•
the Group financial statements have been properly prepared in accordance
with United Kingdom adopted international accounting standards;
•
the Parent Company financial statements have been properly prepared in
accordance with United Kingdom adopted international accounting standards
and as applied in accordance with the provisions of the Companies Act 2006; and
•
the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
•
the Consolidated income statement;
•
the Consolidated statement of comprehensive income;
•
the Consolidated and Company statements of financial position;
•
the Consolidated statement of changes in equity and Company statement of
changes in shareholder’s equity;
•
the Consolidated and Company statements of cash flows; and
•
the related notes 1 to 32 to the Group Financial Statements and C1 to C7 to the
Company Financial Statements.
The financial reporting framework that has been applied in their preparation is
applicable law and United Kingdom adopted international accounting standards and,
as regards the Parent Company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK)
(ISAs (UK)) and applicable law. Our responsibilities under those standards are further
described in the auditor’s responsibilities for the audit of the financial statements
section of our report.
We are independent of the Group and the Parent Company in accordance with the
ethical requirements that are relevant to our audit of the financial statements in the
UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied
to listed public interest entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. The non-audit services provided to the Group
and Parent Company for the year are disclosed in note 4 to the financial statements.
We confirm that we have not provided any non-audit services prohibited by the FRC’s
Ethical Standard to the Group or the Parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
3. Summary of our audit approach
Key audit
matters
The key audit matters that we identified in the current year were:
•
responding to the cyber incident (the ‘incident’);
•
accounting for the Store Estate Programme;
•
disclosure of adjusting items as part of alternative
performance measures; and
•
recognition of promotional income - Ocado Retail Limited.
Materiality The materiality that we used for the Group financial statements
was £33.5 million which was determined on the basis of 5.0% of
M&S Group adjusted profit before tax, as defined on page 186.
Scoping Our audit procedures covered 96% (2025: 92%) of Group revenue,
99% (2025: 96%) of M&S Group adjusted profit before tax, 89%
(2025: 72%) of total assets and 92% (2025: 79%) of total liabilities.
Significant
changes in
our approach
The pervasive impact of the cyber incident on the Group’s
operations and control environment has increased the risk of
material misstatement across a range of areas of the audit.
Consequently, our audit response has been identified as a key
audit matter in the current period, reflecting the significant change
in our audit strategy and resource allocation on the prior year.
Following the change in control Ocado Retail Limited’s (‘ORL’s’)
promotional income, derived from supplier agreements to fund
grocery promotions, has been recognised within the Group financial
statements. There is opportunity for potential bias or manipulation in
income recognised, particularly that recognised in the final months in
the year. Accordingly, this has been identified as a key audit matter.
Driven by the change in control, the Group no longer holds an
investment in ORL. As such, the valuation of the Group’s interest
in ORL is no longer reported as a key audit matter.
There are no other significant changes in our approach compared
to the prior period.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MARKS AND SPENCER GROUP PLC CONTINUED
Report on the audit of the financial statements continued
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of
thegoing concern basis of accounting in the preparation of the financial statements
is appropriate.
Our evaluation of the directors’ assessment of the Group’s and Parent Company’s
ability to continue to adopt the going concern basis of accounting included:
•
obtaining an understanding of relevant controls relating to the assessment of
going concern models, including the review of the inputs and assumptions used
inthose models;
•
obtaining management’s Board-approved three-year cash flow forecasts and
covenant compliance forecasts, including sensitivity analysis;
•
assessing the appropriateness of forecast assumptions by:
–
reading analyst reports, industry data and other external information and
comparing these with management’s estimates;
–
comparing forecast sales with recent historical financial information to consider
accuracy of forecasting;
–
assessing the results of the sensitivity analyses performed, including the results
if another cyber incident were to occur;
–
evaluating management’s assessment of the cash flow impact of the cyber
incident, and any potential future impact upon management’s trading forecasts;
–
testing the underlying data generated to prepare the forecast scenarios and to
determine whether there was adequate support for the assumptions underlying
the forecast;
–
reviewing correspondence relating to the availability of the Group’s financing
arrangements, including the refinancing of the Group’s revolving credit facility,
and testing the repurchase and issuance of medium-term notes;
–
assessing the impact of macro-economic conditions on the business; and
–
evaluating the appropriateness of the Group’s disclosures on going concern in
the financial statements.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or collectively,
maycast significant doubt on the Group’s and Parent Company’s ability to continue
as a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate
Governance Code, we have nothing material to add or draw attention to in relation
tothe directors’ statement in the financial statements about whether the directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going
concern are described in the relevant sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of
most significance in our audit of the financial statements of the current period and
include the most significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. These matters included those which had the greatest
effect on: the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MARKS AND SPENCER GROUP PLC CONTINUED
Report on the audit of the financial statements continued
5. Key audit matters continued
5.1. Responding to the cyber incident
Key audit
matter
description
As set out in the Audit & Risk Committee Report (page 63), in
April 2025 the Group was the subject of a cyber incident. Following
the detection of unauthorised activity on its network, the Group
took certain IT systems offline, including its core financial reporting
systems, while thethreat was assessed. Management engaged
a cyber expert to determine the incident’s cause and timeline.
The incident led to the operation of manual processes and
controls across a number of business processes in the first
halfof the financial year, with a staggered return to a more
automated control environment in the second half. The higher
proportion of manual processes and controls implemented in
response during this period gives rise to an inherently higher
risk of fraudulent financial reporting and/or errors.
We consider the pervasive impact of the incident to represent
akey audit matter, due to its significant influence on our overall
audit strategy, and the additional audit effort required to respond
to the increased risks of material misstatement identified
across various financial statement captions. Specifically, we
identified heightened audit risks in respect of cost of sales and
associated working capital balances including trade payables
and inventory; the presentation of costs incurred in responding
to the incident together with the associated insurance income
received; and the accuracy and completeness of any liabilities
relating to potential regulatory fines or penalties claims, or
litigation from customers.
How the scope
of ouraudit
responded to
the key audit
matter
In responding to the identified key audit matter, we completed
the following audit procedures:
•
performed a fully substantive audit at a reduced
performance materiality (55% of Group materiality). With the
exception of a few discrete areas that were unaffected by the
incident, no controls reliance was taken in the current year;
•
with the assistance of our IT specialists, performed the
following to understand the impact of the incident:
–
made inquiries with Group IT management and
management’s cyber experts to gain an understanding of
the nature and root cause of the incident;
–
obtained an understanding of relevant IT controls within
impacted systems, including the relevant manual controls
adopted over the outage period, and those in place
following the incident recovery period;
–
inspected the reports provided by management’s cyber
experts, to evaluate the impact of the cyber incident on the
availability and integrity of key information and data used
for the purposes of financial reporting;
–
assessed the competence, capabilities and objectivity of
the cyber and legal experts used by management; and
–
considered the remedial action taken to strengthen the
internal control environment, together with the enhanced
governance and oversight applied;
•
as part of our overall response to the risk of management
override of controls, profiled and assessed a sample of both
manual and automated journal entries exhibiting
characteristics of interest;
•
for cost of sales and related working capital balances
including trade payables and inventory, performed the
following procedures:
–
attended an increased number of inventory counts for
stores and distribution centres throughout the financial
period, with year-end roll forward procedures performed;
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MARKS AND SPENCER GROUP PLC CONTINUED
How the scope
of ouraudit
responded
tothe key
audit matter
continued
–
evaluated management’s reconciliation of cost of sales to
purchases and the movement in inventory during the
period, which included:
•
assessing a sample of goods receipts through agreement
to purchase order and invoice;
•
assessing a sample of supplier invoices raised without
purchase orders;
•
profiling and testing manual cost of sales journal entries
identified as non-standard or those that were unusual
innature;
•
evaluating the mathematical accuracy of the
reconciliation; and
•
assessing a sample of reconciling items including other cost
of sales through agreement to purchase order and invoice;
–
confirmed trade payables balances through:
•
obtaining supplier confirmations directly from suppliers
(asat period 11), evaluating management’s reconciliation
of these to the accounts payable ledger and related
accruals (where required);
•
obtaining evidence of subsequent payment and other
reconciling items;
•
performing alternative audit procedures to assess open
items where no supplier confirmation was received; and
•
performing roll forward procedures to validate the
year-end position;
Report on the audit of the financial statements continued
5. Key audit matters continued
5.1. Responding to the cyber incident continued
•
assessed a sample of costs associated with the cyber incident,
included within adjusting items, to evaluate whether the related
costs are incremental and directly attributable to the incident;
•
with the support of our internal data privacy specialist,
considered the appropriateness of the recognition of any
potential provision, or contingent liability, in response to the
risk of a regulatory fine or penalty;
•
inquired of internal and external legal counsel and inspected
correspondence to determine the appropriateness of any
provisions held or disclosures made in respect of regulatory
action or litigation as a result of the incident; and
•
assessed the adequacy and appropriateness of disclosures in
the Annual Report.
Key
observations
We did not identify any material misstatements as a consequence
of the incident and we are satisfied that the disclosures made in
connection with the incident are appropriate.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MARKS AND SPENCER GROUP PLC CONTINUED
Report on the audit of the financial statements continued
5. Key audit matters continued
5.2. Accounting for the Store Estate Programme
Key audit
matter
description
In February 2018, the Board approved a list of stores marked
for closure as part of its Store Estate Programme. The total
charge recognised in connection with this closure programme
in previous periods was £1,036.3 million. A further net charge
of£84.1 million (2025: £84.4 million) has been recognised in
adjusting items in the current period due to:
•
new stores being assessed as probable for closure and the
update of estimates made considering known developments
in the exit strategy, including current trading performance,
negotiations with landlords and changes in the retail
property market;
•
strip out and dilapidation costs, as management update their
assessment of costs associated with restoring stores to their
original condition prior to disposal; and
•
accelerated depreciation and impairment of buildings and
fixtures and fittings in respect of additional stores added to
the programme.
Further information is set out in notes 1, where this matter is
also disclosed as a key source of estimation uncertainty, 5 and
15 to the financial statements.
Our key audit matter was focused on the specific assumptions
applied in the discounted cash flow analysis prepared by the
entity including the discount rate, freehold sales proceeds,
leasehold surrender costs, store closure costs and
dilapidations costs.
This is a significant matter considered by the Audit & Risk
Committee on page 62.
How the scope
of our audit
responded to
the key audit
matter
In responding to the identified key audit matter, we completed
the following audit procedures:
•
obtained an understanding of relevant controls relating to
the review and approval of the Group’s Store Estate
Programme model;
•
performed enquiries of the Board and inspected the latest
strategic plans, Board and relevant sub-committee minutes
of meetings;
•
with the involvement of our real estate specialists, we
evaluated the appropriateness of the entity’s judgements
fora representative sample of properties and benchmarked
with reference to external data;
•
evaluated the scope of the programme and composition
ofstores earmarked for closure, depending on their
disposalroute;
•
assessed the mechanical accuracy of discounted cash flow
models and other key provision calculations;
•
assessed the reasonableness of key inputs to the discounted
cash flow models including the discount rate, store closure
costs, freehold sales proceeds, leasehold surrender costs
and dilapidations costs with reference to available evidence;
•
recalculated the closing provision for a representative
sample of stores;
•
evaluated the accuracy and completeness of provisions
recorded considering the status of the Group’s Store Estate
Programme; and
•
assessed the completeness and accuracy of disclosures
within the financial statements.
Key
observations
We are satisfied that the Group’s estimate of the store exit
charges, and the associated disclosures are appropriate.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MARKS AND SPENCER GROUP PLC CONTINUED
Report on the audit of the financial statements continued
5. Key audit matters continued
5.3. Disclosure of adjusting items as part of alternative performance measures
Key audit
matter
description
The Group has presented an alternative performance measure
being M&S Group adjusted profit before tax of £671.4 million
(2025: £881.1 million), which is derived from profit before tax
of£364.6 million (2025: profit before tax of £511.8 million)
adjusted for a number of items totalling £292.1 million (2025:
£363.7 million) which the Group considers meet their definition
of an ‘adjusting item’, and excludes adjusted loss before tax
attributable to non-controlling interest of £14.7 million (2025:
£5.6 million). Judgement is exercised by the entity in determining
the classification of such items in accordance with guidance
issued by European Securities and Markets Authority (‘ESMA’)
and the FRC. We consider there to be a risk of fraud in the
reporting of adjusting items within the alternative
performance measures.
In determining M&S Group adjusted profit before tax, we
identified the following risks:
•
the identification and classification of items as ‘adjusting’ as
part of the presentation of alternative performance measures
may be inappropriate, distorting the reported results;
•
the omission of items which are considered material, one-off
or significant in nature, distorting the alternative
performance measures; and
•
the clarity and detail of disclosures in respect of adjusting
items as part of alternative performance measures may be
insufficient, preventing investors from obtaining a clear
understanding of the Group’s results and performance.
The Group’s policy regarding adjusting items is set out in
note1, where this is also highlighted as a critical
accountingjudgement.
How the scope
of our audit
responded to
the key audit
matter
In responding to the identified key audit matter, we completed
the following audit procedures:
•
obtained an understanding of relevant controls, relating to
the identification and disclosure of adjusting items within
alternative performance measures;
•
evaluated the rationale applied in identifying items as
adjusting and completed an independent assessment as
tothe selection and presentation of adjusting items based
on their nature;
•
assessed the identification and consistency of items
reported as adjusting period on period, with reference to
guidance published by ESMA and the FRC;
•
assessed a sample of adjusting items through agreement
tosupporting evidence, including testing of cyber incident
related costs;
•
benchmarked certain adjusting items identified by the entity
with comparable companies;
•
use of our cumulative audit knowledge to identify other
transactions outside of the normal course of business, or
which display characteristics of being material, significant or
one-off in nature;
•
considered the impact of the classification of programmes
as adjusting items, as this affects the key performance
indicators (‘KPIs’) used in directors’ remuneration targets
andcould result in management bias; and
•
assessed the completeness and accuracy of disclosures
within the financial statements.
Key
observations
The value of adjusting items results in a material difference
between the statutory and adjusted results. We are satisfied
the adjusting items in their classification and presentation
isconsistent with the Group’s policy and the amounts
areappropriate.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MARKS AND SPENCER GROUP PLC CONTINUED
Report on the audit of the financial statements continued
5. Key audit matters continued
5.4. Recognition of Promotional Income - Ocado Retail Limited
Key audit
matter
description
ORL, a subsidiary of the Group, has agreements with suppliers
whereby allowances are received to fund the sale of certain
grocery items on promotion (‘promotional income’). Following
the change in control of ORL on 6 April 2025, promotional
income of £177.4 million arising from the Ocado Retail business
has been recognised for the first time within cost of sales in the
52 weeks ended 28 March 2026.
The timing of recognition is driven by when the corresponding
promotional activity has taken place. For most of the year
there is limited judgement, as when each individual promotional
campaign has completed, amounts have been invoiced to
suppliers and sufficient time has elapsed for there to have
been any revisions based on supplier enquiry. However, in the
final months of the year there is a greater risk and opportunity
for bias and manipulation considering the typical time lag
between the issuance of an invoice and enquiry from a supplier.
There is therefore a potential risk that amounts are recognised
during the year but subsequently revised after approval of the
financial statements.
The Group’s policy regarding promotional income is set out
innote 1.
How the scope
of our audit
responded to
the key audit
matter
In responding to the identified key audit matter, we completed
the following audit procedures:
•
obtained an understanding of controls relevant to the
accounting for promotional income in Ocado Retail business;
•
obtained a sample of supplier confirmations directly from
suppliers to assess the amounts recorded through the period
and the balance sheet receivable at period end, with
additional samples for the final four months of the period;
•
recalculated the accrued income balance at period end for
asample using agreements, sales data and supporting
promotional income earned, invoices raised and evidence
ofpayment receipts (to the extent received);
•
performed inquiries with the in-house buying team to
understand the rationale for any variances in confirmation
responses, obtaining supporting evidence and direct
supplier confirmation of resolution;
•
evaluated a sample of credit notes and disputes during and
after the period end to search for contradictory evidence of
the occurrence of promotions and recognition of related income;
•
assessed the recoverability of a sample of unsettled accrued
income balances included on the balance sheet for valuation
and allocation; and
•
assessed the completeness and accuracy of disclosures
within the financial statements.
Key
observations
We are satisfied that the accounting for promotional income
during the period is appropriate.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MARKS AND SPENCER GROUP PLC CONTINUED
Report on the audit of the financial statements continued
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements
that makes it probable that the economic decisions of a reasonably knowledgeable
person would be changed or influenced. We use materiality both in planning the
scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial
statements as a whole as follows:
Group financial statements Parent Company financial statements
Materiality £33.5 million
(2025: £37.0 million)
£30.2 million
(2025: £33.3 million)
Basis for
determining
materiality
Using professional
judgement, we determined
materiality to be £33.5 million
based on 5.0% of M&S Group
adjusted profit before tax
(‘PBT’) of £671.4 million (2025:
4.3% of Group profit before
tax and adjusting items of
£875.5 million). The decrease
in materiality reflects the
negative impact of the cyber
incident on the Group’s
financial performance.
We have used 3% of net assets
in both the current and the
prior period, capped at 90% of
Group materiality, as the basis
for materiality.
M&S Group
adjusted PBT
£671.4m
Group materiality
£33.5m
Component performance
materiality range £5.5m
to£16.6m
Audit Committee
reporting threshold
£1.7m
Rationale
forthe
benchmark
applied
As a listed business, we
concluded that adjusted
profit before tax is the most
appropriate benchmark to
determine materiality, being
the primary measure of
performance for key
stakeholders and is used by
investors and other readers of
the financial statements.
There has been a change in
current year in the Group’s
key performance indicator
from ‘Group profit before tax
and adjusting items’ to ‘M&S
Group adjusted profit before
tax’, removing the adjusted
profit before tax attributable
to non-controlling interest.
We concluded that it would be
appropriate for us to use the
group’s revised adjusted
profit benchmark as the basis
for our materiality.
Net assets are used as the
benchmark as the Parent
Company operates primarily
as a holding company for the
Group and we therefore
consider this as the key metric
for the Parent Company.
We capped materiality at 90%
of Group materiality to
reduce the risk of a material
error arising as a result of the
consolidation of the Parent
Company’s result in the
Group financial statements.
M&S Group adjusted PBT
Group materiality
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MARKS AND SPENCER GROUP PLC CONTINUED
Report on the audit of the financial statements continued
6. Our application of materiality continued
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the
probability that, in aggregate, uncorrected and undetected misstatements exceed
the materiality for the financial statements as a whole.
Group financial statements Parent Company financial statements
Performance
materiality
55% (2025: 65%) of group
materiality
55% (2025: 65%) of parent
company materiality
Basis and
rationale for
determining
performance
materiality
In determining performance materiality, we considered the
following factors:
•
the pervasive impact of the cyber incident on both the
operational and financial processes and controls;
•
our cumulative knowledge of the Group and its environment,
including industry specific trends;
•
the stability in key management personnel; and
•
the nature, quantum and volume of misstatements identified
inprior periods, both corrected and uncorrected.
6.3. Error reporting threshold
We agreed with the Audit & Risk Committee that we would report to the Committee
all audit differences in excess of £1.7 million (2025: £1.9 million), as well as differences
below that threshold that, in our view, warranted reporting on qualitative grounds.
Wealso report to the Audit & Risk Committee on disclosure matters that we identified
when assessing the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our audit was scoped by obtaining an understanding of the Group and its
environment, including Group-wide controls, and assessing the risks of material
misstatement at the Group level.
Based on our assessment we have focused our audit on the UK business which was
subject to an audit of the entire financial information, Ocado Retail which was subject
to an audit of one or more account balances, classes of transactions or disclosures,
and India which was subject to specified audit procedures. We have performed our
audit of the UK components (which included the parent company) using a performance
materiality of £16.6 million (or 90% of Group performance materiality) (2025: £21.6million),
our audit of the ORL component using a performance materiality of £12.9 million
(2025: £20.0 million), and our specified audit procedures of the India component using
a performance materiality of £5.5 million (2025: £5.0 million).
For components and account balances not subject to audit procedures we performed
analytical review procedures to assess whether there were any additional significant
risks of material misstatement in the residual population.
We tested the consolidation at the group level.
Subject to audit
procedures 96%
Review at group level 4%
Subject to audit
procedures 99%
Review at group level 1%
Subject to audit
procedures 89%
Review at group level 11%
Revenue Adjusted profit before tax
Total Assets
7.2. Our consideration of the control environment
The pervasive impact of the cyber incident necessitated a change in our audit
strategy, compared with the previous year where we were able to rely on controls
overa number of business process. This resulted in a primarily substantive testing
approach. This was primarily due to key financial systems, critical for financial
reporting, being either offline or not fully operational throughout the year.
With involvement of out IT specialists we performed the work on General IT Controls
which was limited to assessing the impact of the incident and management’s
remediation efforts. Consequently, we placed no reliance on IT controls, and
mitigating work involved additional substantive testing.
We obtained an understanding of manual business controls implemented by
management. These controls were both in response to the incident and related to key
audit areas, including those noted in section 5, inventory provisions, going concern,
pensions, store impairment, and financial reporting processes.
All identified control deficiencies and recommendations for improvement have been
reported to management and the Audit and Risk Committee (where applicable).
TheGroup continues to invest in addressing our observations.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 107
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MARKS AND SPENCER GROUP PLC CONTINUED
Report on the audit of the financial statements continued
7. An overview of the scope of our audit continued
7.3. Our consideration of climate-related risks
The Group continues to reassess the potential impacts of climate change and set
targets which the directors consider to be aligned with the Paris Agreement.
The Group considers that the most likely impact on the financial statements will be
inrelation to its three-year cash flow forecasts and has included the impact within
these forecasts where appropriate. Whilst at this stage there is significant uncertainty
regarding what the long-term impact of climate change initiatives may be, the
forecasts reflect the entity’s best estimate of the impact on the financial statements
as explained in note 1.
Whilst there continues to be uncertainty regarding what the long-term impact of
climate change initiatives may be, the Group continues to consider the impact on the
financial statements in the cash flow forecasts.
As a part of our audit procedures, we have obtained the entity’s climate-related risk
assessment and held discussions with management to understand the process of
identifying climate-related risks, the determination of mitigating actions and the
impact on the Group’s financial statements. Our procedures were performed with the
involvement of our climate-change specialists and included reading disclosures
included in the Strategic Report on page 28 to consider whether they are materially
consistent with the financial statements and our knowledge obtained in the audit.
In considering the disclosures presented as part of the Strategic Report on page 28,
we engaged our climate-change specialists to assess compliance with the Task Force
on Climate-related Financial Disclosures (‘TCFD’) and Climate-related Financial
Disclosure (‘CFD’) requirements, and the recommendations made by both the Task
Force and FRC as set out in their thematic reviews. We have also assessed whether
these disclosures reflect our understanding of the Group’s approach to climate.
We did not identify climate-related risk as a separate key audit matter in our audit
given the nature of the Group’s operations and knowledge gained of its impact on
critical accounting estimates and judgements during our risk assessment procedures
and audit procedures.
7.4. Working with other auditors
The audit of the UK business has been performed by the Group audit team.
We have two component audit teams: Deloitte UK (Ocado Retail Limited) and Deloitte
India (India). We have issued detailed instructions to both component audit teams to
perform audit procedures.
We have engaged regularly with the component auditors throughout the audit
process, determining the nature, timing, and extent of the audit procedures (involved
in risk assessment of the components, in particular significant and higher risk areas)
to be performed. We reviewed component auditor working papers and component
reporting, communicating regularly to interact on any related audit and accounting
matters which arose.
8. Other information
The other information comprises the information included in the annual report,
otherthan the financial statements and our auditor’s report thereon. The directors
are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or
ourknowledge obtained in the course of the audit, or otherwise appears to be
materiallymisstated.
If we identify such material inconsistencies or apparent material misstatements,
weare required to determine whether this gives rise to a material misstatement in
thefinancial statements themselves. If, based on the work we have performed,
weconclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MARKS AND SPENCER GROUP PLC CONTINUED
Report on the audit of the financial statements continued
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are
responsible for the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the
Group’s and the Parent Company’s ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or the Parent
Company or to cease operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence
theeconomic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements
is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect
material misstatements in respect of irregularities, including fraud. The extent to
which our procedures are capable of detecting irregularities, including fraud is
detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of
irregularities, including fraud and non-compliance with laws and regulations,
weconsidered the following:
•
the nature of the industry and sector, control environment and business
performance including the design of the Group’s remuneration policies, key
driversfor directors’ remuneration, bonus levels and performance targets;
•
the Group’s own assessment of the risks that irregularities may occur either
asaresult of fraud or error;
•
results of our enquiries of management, internal audit, the directors and the
Audit& Risk Committee about their own identification and assessment of the
risksof irregularities, including those that are specific to the Group’s sector;
•
any matters we identified having obtained and reviewed the Group’s
documentation of their policies and procedures relating to:
–
identifying, evaluating and complying with laws and regulations and whether
they were aware of any instances of non-compliance;
–
detecting and responding to the risks of fraud and whether they have knowledge
of any actual, suspected or alleged fraud;
–
the internal controls established to mitigate risks of fraud or non-compliance
with laws and regulations; and
–
the implications of the cyber incident which occurred in April 2025; and
•
the matters discussed among the audit engagement team including component
audit teams and relevant internal specialists, including tax, valuations, pensions, IT,
climate-change, analytics, real estate, data privacy specialist and fraud specialists
regarding how and where fraud might occur in the financial statements and any
potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives
thatmay exist within the organisation for fraud and identified the greatest potential
for fraud in the disclosure of adjusting items as part of alternative performance
measures and recognition of promotional income of ORL. In common with all audits
under ISAs (UK), we are also required to perform specific procedures to respond to
the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that
theGroup operates in, focusing on provisions of those laws and regulations that
hada direct effect on the determination of material amounts and disclosures in the
financial statements. The key laws and regulations we considered in this context
included the UK Companies Act, Financial Conduct Authority regulations, Listing
Rules, and pensions and tax legislation.
In addition, we considered provisions of other laws and regulations that do not
haveadirect effect on the financial statements but compliance with which may be
fundamental to the Group’s ability to operate or to avoid a material penalty. These
included the competition and anti-bribery laws, data protection, Groceries Supply
Code of Practice, and employment, environmental and health and safety regulations.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 109
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MARKS AND SPENCER GROUP PLC CONTINUED
Report on the audit of the financial statements continued
11. Extent to which the audit was considered capable of detecting
irregularities, including fraud continued
11.2. Audit response to risks identified
As a result of performing the above, we identified responding to the cyber incident,
the disclosure of adjusting items as part of alternative performance measures and
recognition of promotional income in ORL as key audit matters related to the
potential risk of fraud or non-compliance with laws and regulations. The key audit
matters section of our report explains the matters in more detail and also describes
the specific procedures we performed in response to those key audit matters.
In addition to the above, our procedures to respond to risks identified included
thefollowing:
•
reviewing the financial statement disclosures and testing to supporting
documentation to assess compliance with provisions of relevant laws and
regulations described as having a direct effect on the financial statements;
•
enquiring of management, the Audit & Risk Committee and in-house legal counsel
concerning actual and potential litigation and claims;
•
performing analytical procedures to identify any unusual or unexpected
relationships that may indicate risks of material misstatement due to fraud;
•
reading minutes of meetings of those charged with governance, reviewing internal
audit reports, reviewing correspondence with HMRC and reviewing management’s
cyber experts report;
•
assessing the Board’s response to the cyber incident; and
•
in addressing the risk of fraud through management override of controls, testing
the appropriateness of journal entries and other adjustments and, in response to
the cyber incident, profiling and testing manual cost of sales journals identified as
non-standard or those that were unusual in nature; assessing whether the
judgements made in making accounting estimates are indicative of a potential bias;
and evaluating the business rationale of any significant transactions that are
unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud
risks to all engagement team members including internal specialists and component
audit teams, and remained alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ Remuneration Report to be audited has
been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the
financial year for which the financial statements are prepared is consistent with
the financial statements; and
•
the strategic report and the directors’ report have been prepared in accordance
with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent
Company and their environment obtained in the course of the audit, we have not
identified any material misstatements in the strategic report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going
concern, longer-term viability and that part of the Corporate Governance Statement
relating to the group’s compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the Corporate Governance Statement is materially consistent
with the financial statements and our knowledge obtained during the audit:
•
the directors’ statement with regards to the appropriateness of adopting the
going concern basis of accounting and any material uncertainties identified set
out on page 97;
•
the directors’ explanation as to its assessment of the group’s prospects,
theperiod this assessment covers and why the period is appropriate set out
onpage 97;
•
the directors’ statement on fair, balanced and understandable set out on
page61;
•
the Board’s confirmation that it has carried out a robust assessment of the
emerging and principal risks set out on page 43;
•
the section of the annual report that describes the review of effectiveness
ofrisk management and internal control systems set out on page 64; and
•
the section describing the work of the Audit & Risk Committee set out on
page60.
Marks and Spencer Group plc Annual Report and Financial Statements 2026110
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Report on other legal and regulatory requirements
continued
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
•
we have not received all the information and explanations we require for our audit; or
•
adequate accounting records have not been kept by the Parent Company, or returns
adequate for our audit have not been received from branches not visited by us; or
•
the Parent Company financial statements are not in agreement with the accounting
records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion
certaindisclosures of directors’ remuneration have not been made or the part of
theDirectors’ Remuneration Report to be audited is not in agreement with the
accounting records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit & Risk Committee, we were reappointed
by the shareholders to audit the financial statements for the year ending 29 March
2025 and subsequent financial periods. The period of total uninterrupted engagement
including previous renewals and reappointments of the firm is 12 years, covering the
years ending 28 March 2015 to 28 March 2026.
15.2. Consistency of the audit report with the additional report to the Audit & Risk
Committee
Our audit opinion is consistent with the additional report to the Audit & Risk Committee
we are required to provide in accordance with ISAs (UK).
16. Use of our report
This report is made solely to the company’s members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and
Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R, these financial statements will form
part of the Electronic Format Annual Financial Report filed on the National Storage
Mechanism of the FCA in accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s
report provides no assurance over whether the Electronic Format Annual Financial
Report has been prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.
Jane Whitlock ACA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
19 May 2026
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MARKS AND SPENCER GROUP PLC CONTINUED
Marks and Spencer Group plc Annual Report and Financial Statements 2026 111
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
| 52 weeks | 52 weeks | ||
| ended | ended | ||
| 28 March 2026 | 29 March 2025 | ||
| Total | Total | ||
| £mNotes | £m | ||
Revenue | 2, 3 | ||
Share of result in associate – Ocado Retail Limited 1 | 3, 29 | ( | |
Operating profit | 3, 5 | ||
Finance income | 5, 6 | ||
Finance costs | 5, 6 | ( | ( |
Profit before tax | 2, 4, 5 | ||
Income tax expense | 7 | ( | ( |
Profit for the year | |||
| Attributable to: | |||
Owners of the parent | |||
Non-controlling interests 2 | ( | ( | |
| Earnings per share | |||
Basic earnings per share | 8 | ||
Diluted earnings per share | 8 | ||
Reconciliation of M&S Group adjusted profit before tax 3 – non-GAAP measure | |||
Profit before tax | |||
Adjusting items | 5 | ||
Adjusted non-controlling interests | |||
M&S Group adjusted profit before tax | |||
| Adjusted earnings per share – non-GAAP measure | |||
Basic | 8 | ||
Diluted | 8 |
1 On 6 April 2025, in line with expectations, the Group obtained control of Ocado Retail Limited; therefore, it is no longer treated as an associate, with the Group now consolidating the results of Ocado Retail Limited.
2 Non-controlling interests include the minority share of results in Ocado Retail Limited and other joint ventures in India and the UK.
3 Refer to the Glossary for a complete definition of M&S Group adjusted profit before tax.
Marks and Spencer Group plc Annual Report and Financial Statements 2026112
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| 52 weeks | 52 weeks | ||
| ended | ended | ||
| 28 March 2026 | 29 March 2025 | ||
| £mNotes | £m | ||
Profit for the year | |||
| Other comprehensive income/(expense): | |||
| Items that will not be reclassified subsequently to profit or loss | |||
Remeasurements of retirement benefit schemes | 11 | ( | |
Tax on retirement benefit schemes | ( | ||
( | |||
| Items that may be reclassified subsequently to profit or loss | |||
| Foreign currency translation differences | |||
– movements recognised in other comprehensive income | ( | ( | |
| Cash flow hedges | |||
– fair value movements recognised in other comprehensive income | 21 | ( | ( |
– reclassified and reported in profit or loss | 21 | ||
Tax credit on cash flow hedges | |||
( | ( | ||
Other comprehensive expense for the year, net of tax | ( | ( | |
Total comprehensive income for the year | |||
| Attributable to: | |||
Owners of the parent | |||
Non-controlling interests | ( | ( | |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 113
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| As at | As at | |||
| As at | 29 March | 30 March | ||
| 28 March | 2025 | 2024 | ||
| 2026 | (Restated) | (Restated) | ||
| Notes | £m | £m | £m | |
| Assets | ||||
| Non-current assets | ||||
Intangible assets | 14 | |||
Property, plant and equipment | 15 | |||
Investment property | ||||
| Investments in joint ventures | ||||
andassociates | ||||
Other financial assets | 16 | |||
Retirement benefit asset | ||||
Trade and other receivables | 17 | |||
Derivative financial instruments | 21 | |||
Deferred tax assets | 23 | |||
| Current assets | ||||
Inventories | ||||
Other financial assets | 16 | |||
Trade and other receivables | 17 | |||
Derivative financial instruments | 21 | |||
Current tax assets | ||||
Cash and cash equivalents | 18 | |||
Total assets | ||||
| Liabilities | ||||
| Current liabilities | ||||
Trade and other payables | 19 | |||
| Partnership liability to the Marks & | ||||
Spencer UK Pension Scheme | ||||
Borrowings and other financial liabilities | 20 | |||
Derivative financial instruments | 21 | |||
Provisions | 22 | |||
Current tax liabilities | ||||
| As at | As at | |||
| As at | 29 March | 30 March | ||
| 28 March | 2025 | 2024 | ||
| 2026 | (Restated) | (Restated) | ||
| Notes | £m | £m | £m | |
| Non-current liabilities | ||||
Retirement benefit deficit | 11 | |||
Trade and other payables | 19 | |||
Borrowings and other financial liabilities | 20 | |||
Derivative financial instruments | 21 | |||
Provisions | 22 | |||
Deferred tax liabilities | 23 | |||
Total liabilities | ||||
Net assets | ||||
| Equity | ||||
Issued share capital | 24 | |||
Share premium account | ||||
Capital redemption reserve | ||||
Hedging reserve | 21 | ( | ( | |
Cost of hedging reserve | 21 | ( | ||
Other reserve | ( | ( | ( | |
Foreign exchange reserve | ( | ( | ( | |
Retained earnings | ||||
| Equity attributable to owners | ||||
oftheparent | ||||
Non-controlling interests | ( | |||
Total equity |
Marks and Spencer Group plc Annual Report and Financial Statements 2026114
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Ordinary | Share | Capital | Foreign | Non- | |||||||
| share | premium | redemption | Hedging | Cost of | Other | exchange | Retained | controlling | |||
| capital | account | reserve | reserve | hedging | res e r ve ¹ | reserve | earnings | Total | interest | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
As at 31 March 2024 | ( | ( | ( | ( | |||||||
Prior year restatement | ( | ( | ( | ||||||||
As at 31 March 2024 (restated) | ( | ( | ( | ( | |||||||
Profit/(loss) for the year | ( | ||||||||||
| Other comprehensive (expense)/income: | |||||||||||
| Foreign currency translation | |||||||||||
– movements recognised in other comprehensive income | ( | ( | ( | ||||||||
Remeasurements of retirement benefit schemes | ( | ( | ( | ||||||||
Tax on retirement benefit schemes | |||||||||||
| Cash flow hedges | |||||||||||
– fair value movement in other comprehensive income | ( | ( | ( | ||||||||
– reclassified and reported in profit or loss | |||||||||||
Tax on cash flow hedges | ( | ||||||||||
Other comprehensive (expense)/income: | ( | ( | ( | ( | ( | ||||||
Total comprehensive (expense)/income | ( | ( | ( | ||||||||
Cash flow hedges recognised in inventories | |||||||||||
Tax on cash flow hedges recognised in inventories | ( | ( | ( | ||||||||
| Transactions with owners: | |||||||||||
Dividends | ( | ( | ( | ||||||||
Transactions with non-controlling shareholders | ( | ( | |||||||||
Shares issued in respect of employee share options | |||||||||||
Purchase of shares held by employee trusts | ( | ( | ( | ||||||||
Credit for share-based payments | |||||||||||
Deferred tax on share schemes | |||||||||||
As at 29 March 2025 | ( | ( | ( |
1 The ‘Other reserve’ was originally created as part of the capital restructuring that took place in 2002. It represents the difference between the nominal value of the shares issued prior to the capital
reductionby the Company (being the carrying value of the investment in Marks and Spencer plc) and the share capital, share premium and capital redemption reserve of Marks and Spencer plc at the date
ofthe transaction.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 115
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONTINUED
| Ordinary | Share | Capital | Foreign | Non- | |||||||
| share | premium | redemption | Hedging | Cost of | Other | exchange | Retained | controlling | |||
| capital | account | reserve | reserve | hedging | re se r ve ¹ | reserve | earnings | Total | interest | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
As at 30 March 2025 | ( | ( | ( | ||||||||
Profit/(loss) for the year | ( | ||||||||||
| Other comprehensive (expense)/income: | |||||||||||
| Foreign currency translation | |||||||||||
– movements recognised in other comprehensive income | ( | ( | ( | ||||||||
Remeasurements of retirement benefit schemes | |||||||||||
Tax on retirement benefit schemes | ( | ( | ( | ||||||||
| Cash flow hedges | |||||||||||
– fair value movement in other comprehensive income | ( | ( | ( | ( | |||||||
– reclassified and reported in profit or loss | ( | ||||||||||
Tax on cash flow hedges | |||||||||||
Other comprehensive (expense)/income | ( | ( | ( | ( | ( | ||||||
Total comprehensive (expense)/income | ( | ( | ( | ( | |||||||
Cash flow hedges recognised in inventories | |||||||||||
Tax on cash flow hedges recognised in inventories | ( | ( | ( | ||||||||
| Transactions with owners: | |||||||||||
Dividends | ( | ( | ( | ||||||||
Transactions with non-controlling shareholders | ( | ( | |||||||||
| Shares issued in respect of employee share options | |||||||||||
Purchase of shares held by employee trusts | ( | ( | ( | ||||||||
Credit for share-based payments | |||||||||||
Tax on share schemes | |||||||||||
As at 28 March 2026 | ( | ( | ( |
1 The ‘Other reserve’ was originally created as part of the capital restructuring that took place in 2002. It represents the difference between the nominal value of the shares issued prior to the capital
reductionby the Company (being the carrying value of the investment in Marks and Spencer plc) and the share capital, share premium and capital redemption reserve of Marks and Spencer plc at the date
ofthe transaction.
Marks and Spencer Group plc Annual Report and Financial Statements 2026116
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
| 52 weeks | 52 weeks | ||
| ended | ended | ||
| 28 March 2026 | 29 March 2025 | ||
| Notes | £m | £m | |
| Cash flows from operating activities | |||
Cash generated from operations | 26 | ||
Income tax paid | ( | ( | |
Net cash inflow from operating activities | |||
| Cash flows from investing activities | |||
Proceeds on property disposals | |||
Purchase of property, plant and equipment | ( | ( | |
Purchase of intangible assets | ( | ( | |
Sale/(purchase) of current financial assets | ( | ||
Purchase of non-current financial assets | ( | ( | |
Proceeds on disposal of non-current financial assets | |||
Payment of deferred consideration for subsidiary | ( | ||
Consolidation of subsidiary, net of cash acquired 1 | |||
Interest received | |||
Net cash used in investing activities | ( | ( | |
| Cash flows from financing activities | |||
Interest paid 2 | ( | ( | |
Redemption of Medium-Term Notes 3 | ( | ( | |
Repayment of lease liabilities | ( | ( | |
Payment of partnership liability to the Marks & Spencer UK Pension Scheme | 12 | ( | |
Equity dividends paid | ( | ( | |
Shares issued on exercise of employee share options | 24 | ||
Transactions with non-controlling interest | ( | ( | |
Purchase of own shares by employee trust | ( | ( | |
Net cash used in financing activities | ( | ( | |
Net cash inflow/(outflow) from activities | ( | ||
Effects of exchange rate changes | ( | ( | |
Opening net cash | |||
Closing net cash | 27 |
1 Includes £6 8 . 2 m (last year: £nil) relating to the consolidation of Ocado Retail Limited.
2 Includes interest paid on lease liabilities of £136 . 0 m (last year: £1 03 . 4 m).
3 Includes £105 . 5 m of maturing 2025 notes, £193m of outstanding 2027 notes repurchased in February 2026 and £10 9 m of outstanding 2026 notes repurchased in March 2026, resulting in a gain of £1 .1 m
recognised within ‘interest payable on Medium-Term Notes’ in net finance costs.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 117
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
1 Accounting policies
Marks and Spencer Group plc Annual Report and Financial Statements 2026118
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Accounting policies continued
New accounting standards adopted by the Group continued
As at 29 March 2025 | As at 30 March 2024 | |||||
| Reported | Adjusted | Restated | Reported | Adjusted | Restated | |
| £m | £m | £m | £m | £m | £m | |
| Deferred | ||||||
tax liability | 199.4 | 119.5 | 318.9 | 205.8 | 119.5 | 325.3 |
| Retained | ||||||
earnings | 5,888.5 | (119.5) | 5,769.0 | 5,789.6 | (119.5) | 5,670.1 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 119
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Accounting policies continued
Alternative performance measures continued
Accounting convention
The financial statements are drawn up on the historical cost basis of accounting,
except for certain financial instruments (including derivative instruments) and plan
assets of defined benefit pension schemes which are measured at fair value at the
end of each reporting period, as explained in the accounting policies below.
Marks and Spencer Group plc Annual Report and Financial Statements 2026120
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Accounting policies continued
Associates continued
Marks and Spencer Group plc Annual Report and Financial Statements 2026 121
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Accounting policies continued
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Accounting policies continued
Marks and Spencer Group plc Annual Report and Financial Statements 2026 123
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Accounting policies continued
Foreign currencies continued
Note | Measurement | |
| Financial assets: | ||
Other investments | 16 | FVTPL 1 |
Loans to related parties | 17 | Amortised cost |
Trade receivables | 17 | Amortised cost |
Lease receivables | 17 | Amortised cost |
Other receivables | 17 | Amortised cost |
Cash and cash equivalents | 18 | Amortised cost 2 |
Derivative financial instruments | 21 | FVTPL |
| Financial liabilities: | ||
Borrowings and overdrafts | 20 | Amortised cost |
Trade payables | 19 | Amortised cost |
Other payables | 19 | Amortised cost |
Contingent consideration | 19 | FVTPL |
Accruals | 19 | Amortised cost |
Lease liabilities | 20 | Amortised cost |
Derivative financial instruments | 21 | FVTPL |
Marks and Spencer Group plc Annual Report and Financial Statements 2026124
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Accounting policies continued
Financial instruments continued
Marks and Spencer Group plc Annual Report and Financial Statements 2026 125
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Accounting policies continued
Derivative financial instruments and hedging activities continued
Marks and Spencer Group plc Annual Report and Financial Statements 2026126
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Accounting policies continued
Critical accounting judgements continued
Marks and Spencer Group plc Annual Report and Financial Statements 2026 127
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
52 weeks ended 28 March 2026 | 52 weeks ended 29 March 2025 (restated) 4,5 | |||||||||||
| Fashion, | Fashion, | |||||||||||
| Home & | All other | Home & | All other | |||||||||
Beauty | Food | International | Ocado | segments | Group | Beauty 4 | Food 4,5 | International 4,5 | Ocado | segments | Group | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Sales 1 | 3,915.5 | 9,719.3 | 543.3 | 3,193.4 | — | 17,371.5 | 4,243.4 | 9,085.7 | 585.2 | — | — | 13,914.3 |
Revenue | 3,826.1 | 9,710.8 | 543.3 | 3,193.4 | — | 17,273.6 | 4,145.9 | 9,085.7 | 585.2 | — | — | 13,816.8 |
Insurance income 2 | 100.0 | — | ||||||||||
Group adjusted operating profit/(loss) 3 | 213.4 | 444.5 | 39.1 | 15.2 | 6.2 | 818.4 | 478.0 | 491.8 | 35.9 | (28.7) | 7.5 | 984.5 |
Finance income before adjusting items | 45.0 | 60.6 | ||||||||||
Finance costs before adjusting items | (206.7) | (169.6) | ||||||||||
Less: adjusted non-controlling interests | 14.7 | 5.6 | ||||||||||
| M&S Group adjusted profit/(loss) | ||||||||||||
before tax | 213.4 | 444.5 | 39.1 | 15.2 | 6.2 | 671.4 | 478.0 | 491.8 | 35.9 | (28.7) | 7.5 | 881.1 |
Adjusting items | (292.1) | (363.7) | ||||||||||
Adjusted non-controlling interests | (14.7) | (5.6) | ||||||||||
Profit/(loss) before tax | 213.4 | 444.5 | 39.1 | 15.2 | 6.2 | 364.6 | 478.0 | 491.8 | 35.9 | (28.7) | 7.5 | 511.8 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026128
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2 Segmental information continued
| Other segmental information | ||||||||||||
52 weeks ended 28 March 2026 | 52 weeks ended 29 March 2025 | |||||||||||
| Fashion, | Fashion, | |||||||||||
| Home & | All other | Home & | All other | |||||||||
| Beauty | Food | International | Ocado | segments | Group | Beauty | Food | International | Ocado | segments | Group | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Additions to property, plant and equipment, and intangible assets | ||||||||||||
(excluding goodwill and right-of-use assets) | 229.7 | 449.2 | 4.9 | 12.7 | — | 696.5 | 266.7 | 315.0 | 7.4 | — | — | 589.1 |
Depreciation and amortisation 1,2 | (279.2) | (312.2) | (40.5) | (87.8) | — | (719.7) | (200.6) | (240.9) | (30.7) | — | — | (472.2) |
Impairment charges, impairment reversals and asset disposals 1 | (5.4) | (16.8) | (2.1) | (5.7) | — | (30.0) | (106.3) | (34.6) | — | — | — | (140.9) |
3 Expense analysis
| 2026 | 2025 | |
| Total | Total | |
| £m | £m | |
Revenue | 17, 273.6 | 13,816.8 |
Cost of sales 1, 2 | (11,721.8) | (9,078.7) |
Gross profit | 5,551.8 | 4,738.1 |
Selling and administrative expenses | (5,098.3) | (4,119.7) |
Other operating income | 100.9 | 49.5 |
Share of results of Ocado Retail Limited | — | (43.6) |
Loss on consolidation of Ocado Retail Limited | (17.7) | — |
Operating profit | 536.7 | 624.3 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 129
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
3 Expense analysis continued
| 2026 | 2025 | |
| Total | Total | |
| £m | £m | |
Employee costs 1,2 | 2,113.8 | 1,886.1 |
Occupancy costs | 507.0 | 451.6 |
Repairs, renewals and maintenance of property | 238.3 | 136.0 |
| Depreciation, amortisation and asset impairments | ||
and disposals 3 | 751.3 | 865.2 |
IT costs | 400.2 | 325.1 |
Marketing costs | 318.2 | 261.2 |
Ocado Group recharges to Ocado Retail Limited 4 | 440.3 | — |
Other costs 5 | 329.2 | 194.5 |
Selling and administrative expenses | 5,098.3 | 4,119.7 |
| 2026 | 2025 | |
| £m | £m | |
Net foreign exchange gains | (0.9) | (1.8) |
Cost of inventories recognised as an expense | 10,481.9 | 7,842.4 |
| Cost of inventories recognised as an expense in respect | ||
of write-downs of inventory to net realisable value | 516.3 | 325.2 |
Depreciation of property, plant, and equipment 1 : | ||
– owned assets | 337.9 | 265.7 |
– right-of-use assets | 297.4 | 142.0 |
Amortisation of intangible assets | 84.4 | 64.5 |
Impairments of property, plant and equipment | 26.1 | 48.0 |
Impairment reversals of property, plant and equipment | (26.4) | (19.4) |
Disposals of property, plant and equipment | 42.4 | 63.6 |
Disposals of intangible assets | 1.7 | 3.3 |
Impairments of right-of-use assets | 33.8 | 47.0 |
Impairment reversals of right-of-use assets | (30.0) | (4.3) |
| 2026 | 2025 | |
| £m | £m | |
| Annual audit of the Company and the consolidated | ||
financial statements 1,2 | 3.0 | 2.6 |
Audit of subsidiary companies 1,2 | 1.2 | 0.7 |
Total audit fees | 4.2 | 3.3 |
Audit-related assurance services | 0.9 | 0.5 |
Total non-audit services fees | 0.9 | 0.5 |
Total audit and non-audit services | 5.1 | 3.8 |
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
5 Adjusting items
The total adjusting items reported for the 52-week period ended 28 March 2026 is a
net charge of £292.1m (last year: net charge of £363.7m). The adjustments made to
reported profit before tax to arrive at adjusted profit are:
| 2026 | 2025 | ||
| Notes | £m | £m | |
| Included in share of result of associate – | |||
| Ocado Retail Limited | |||
Amortisation and fair value adjustments arising as part of the investment in Ocado Retail Limited | — | (12.9) | |
Ocado Retail Limited – UK network capacity review | — | (2.0) | |
— | (14.9) | ||
| Included in operating profit | |||
Strategic programmes – Store estate | 15, 22 | (84.1) | (84.4) |
Strategic programmes – International reset | 22 | 10.6 | (20.6) |
| Strategic programmes – Digital and Technology transformation | (4.1) | (10.2) | |
Strategic programmes – Furniture simplification | 22 | — | 11.1 |
Costs associated with the cyber incident | (131.3) | — | |
Store impairments, impairment reversals and other property charges | 15 | — | 2.3 |
Impairment of investment in Ocado Retail Limited | — | (248.5) | |
Amortisation and fair value adjustments relating to Ocado Retail Limited | (26.0) | — | |
Ocado Retail Limited – UK network capacity review | (2.8) | — | |
| M&S Bank transformation and insurance mis-selling provisions | (32.4) | (15.5) | |
Legal settlement | — | 20.5 | |
(270.1) | (345.3) | ||
| Included in net finance (costs)/income | |||
Pension net finance (costs)/income | 11 | (5.0) | 4.1 |
| Net finance costs incurred in relation to Gist Limited | |||
deferred and contingent consideration | (3.8) | (7.6) | |
| Net finance costs relating to amortisation and fair value | |||
adjustments of Ocado Retail Limited | (0.9) | — | |
| Net finance costs relating to M&S Bank transformation | |||
and insurance mis-selling provisions | (0.7) | — | |
(10.4) | (3.5) | ||
M&S Group Adjusting items | (280.5) | (363.7) | |
| Adjusting items attributable to non-controlling interests | |||
included in operating profit 1 | (11.6) | — | |
Adjustments to profit before tax | (292.1) | (363.7) |
1 Relates to 50% non-controlling interest share of amortisation and certain fair value adjustments
following the consolidation of Ocado Retail Limited (£12.1m) and 49% non-controlling interest share
of India store impairment (£0.5m).
Strategic programmes – Store estate (£84.1m)
In November 2016, the Group announced a strategic programme to transform and
rotate the store estate with the overall objective to improve our store estate to better
meet our customers’ needs. The Group has incurred charges of £1,131.1m in the
10 years up to March 2026 under this programme primarily relating to closure costs
associated with stores identified as part of the strategic transformation plans.
The Group has recognised a charge of £84.1m in the period in relation to those stores
identified as part of the rotation plans. The charge primarily reflects the latest view
of store closure plans and latest assumptions for estimated store closure costs, as
well as charges relating to the impairment of buildings and fixtures and fittings, and
depreciation as a result of shortening the useful economic life of stores based on the
most recent approved exit routes.
Further charges relating to the closure and rotation of the store estate are anticipated
over the next five years as the programme progresses, the quantum of which is
subject to change throughout the programme period as the Group gets greater
certainty of circumstances that need to be in place to make closure financially viable.
Future charges will not include Foodhall closures at a lease event where there is
opportunity for a better location, as this is not in the scope of the programme.
The cash flows used within the impairment models for the store estate programme
are based on assumptions which are sources of estimation uncertainty, and small
movements in these assumptions could lead to further impairments. Management
has performed sensitivity analysis on the key assumptions across the store estate
programme. A delay of 12 months in the probable date of each store exit would result in
an increase in the impairment reversal recognised in the period by £10.8m, from £11.9m
to £22.7m. A 5% reduction in planned sales in years 2 and 3 (where relevant) would
result in an increase in the impairment charge of £0.7m. Neither a 250 basis point
increase in the discount rate, a 25 basis point reduction in management gross margin
during the period of trading, nor a 2% increase in the costs associated with exiting a
store would result in a significant increase to the impairment charge, individually or in
combination with the other reasonably possible scenarios considered.
As at 28 March 2026, the total closure programme now consists of 215 stores, 145 of
which have already closed. Further charges of c.£112m are estimated within the next
five financial years, bringing anticipated total programme costs since 2016 to c.£1.2bn.
In addition, where store exit routes in the next five years lead to the recognition of
gains on exit, particularly those relating to asset management, these credits will also
be recognised within adjusting items as part of the programme. The anticipated total
programme costs to date do not include any costs that may arise in relation to a
further c.19 stores currently under consideration for closure within the next five
years. At this stage these c.19 stores remain commercially supportable and in the
event of a decision to close the store, the exit routes are not yet certain.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 131
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
5 Adjusting items continued
Strategic programmes – Store estate (£84.1m) continued
These costs are reported as adjusting items on the basis that they are significant in
quantum and relate to a strategic initiative focused on reviewing our store estate and
to aid comparability from one period to the next. The programme includes all stores
within the programme to be closed by 2030/31, but charges in the year, and future
charges, did not include Foodhall closures at a lease event where there is opportunity
to secure a better location.
Strategic programmes – International reset (£10.6m credit)
In September 2024 the Group announced a reset of priorities for the International
business. This included closures of two European distribution centres, exiting of
legacy franchise businesses not aligned to the strategy and investing in technology
relating to the strategy.
During the year a credit of £10.6m has been recognised as a result of both one-off
charges and gains that are not considered to be day-to-day operations of the business.
These are primarily as a result of updated assumptions regarding contractual
obligations in relation to the closure of the European distribution centres.
These costs are adjusting items as they are significant to the International business
and the business would not have incurred these costs without the strategy reset.
No further costs are expected in 2026/27 as the International reset programme has
concluded in the current year.
Strategic programmes – Digital and Technology transformation (£4.1m)
During 2024/25, to reduce costs and transform our business, the Group confirmed
our desire to build the Digital and Technology team we need for the future, investing
in our core foundations and business platforms. In 2025/26, we have been refreshing
our transformation plans whilst continuing along similar ambitions, including a reset
of key partnerships. We have been resetting our operating model under the new
leadership team, bringing more capabilities in house and changing how we are
structured and how we operate in service of the business. In total we are targeting to
deliver £100m of structural cost savings over the next five years, with an element of
these savings coming from the new operating model and resetting our partnerships.
A charge of £4.1m has occurred in the year as part of our transformation programme,
the majority of which related to third-party transformation costs. Further charges of
c.£10m are expected in relation to this programme to 2028/29, taking total
programme costs to c.£23m.
These costs are considered to be adjusting items as the costs are part of the strategic
programme, are significant in value and would distort the year-on-year profitability
of the business.
Costs associated with the cyber incident (£131.3m)
As announced in April 2025, the Group was the subject of a sophisticated cyber incident.
During the period, the Group incurred £131.3m of material system recovery, risk
management and specialist advisory costs as a direct result of the incident. £109.3m
of these costs related to immediate incident systems response and recovery.
Remaining charges incurred relate to third-party costs predominantly for specialist
legal and professional services support.
These costs are considered to be adjusting items as they relate to incident response
and recovery activities that would not have been incurred without the cyber incident.
Amortisation and fair value adjustments relating to Ocado Retail
Limited (£26.9m)
In April 2025, following the change in accounting control and the consolidation of
Ocado Retail Limited, the Group recognised intangible assets of £292.0m representing
the Ocado brand and acquired customer relationships (see note 14). Other fair value
adjustments for property, plant and equipment of £54.4m were also recognised.
These assets and fair value adjustments are being amortised and depreciated over
their remaining useful economic lives of 10–40 years with the Group’s share (50%) of
charge of £9.2m recognised in the period. The remaining charge of £17.7m relates to
the recognition of the loss on settlement of the Group’s pre-existing relationship.
The charges are considered to be adjusting items as they are based on judgements
about their value and economic life and are not related to the Group’s underlying
trading performance. These charges are reported as adjusting items on the basis that
they are significant in quantum and to aid comparability from one period to the next.
Ocado Retail Limited – UK network capacity review (£2.8m)
On 25 April 2023, Ocado Retail Limited announced the plan to cease operation at its
Customer Fulfilment Centre (CFC) in Hatfield as part of the wider review of UK
network capacity. During H2 2023/24, Ocado Retail Limited also undertook a strategy
and capacity review for the Zoom network. As a result, Ocado Retail Limited recorded
impairment charges, restructuring costs and other related costs of closure. During
the period the Group’s share (50%) of a charge of £2.8m has been recognised (last
year: £2.0m) reflecting the latest assumptions for estimated closure costs.
The charges relating to Ocado Retail Limited are considered to be adjusting items
as they are based on judgements about their value and economic life and are not
related to the Group’s underlying trading performance. These charges are reported
as adjusting items on the basis that they are significant in quantum and to aid
comparability from one period to the next.
Marks and Spencer Group plc Annual Report and Financial Statements 2026132
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
5 Adjusting items continued
M&S Bank transformation and insurance mis-selling provisions (£33.1m)
The Group has an economic interest in Marks and Spencer Financial Services plc
(trading as M&S Bank), a wholly owned subsidiary of HSBC UK Bank plc (HSBC UK),
by way of a Relationship Agreement that entitles the Group to a share of the profits
of M&S Bank after appropriate deductions.
On 9 April 2024, the Group and HSBC UK agreed a new seven-year deal focused on
enhancing M&S’ credit offering and payment solutions through M&S Bank and
bringing together digital payments and loyalty for M&S customers.
As previously disclosed, a deficit had accumulated since September 2012, primarily
relating to liabilities recognised by M&S Bank for redress to customers in respect of
possible mis-selling of financial products. Under the terms of the renegotiated
Relationship Agreement, the Group has agreed to settle the deficit by the end of the
new contract. Other one-off fees are also payable to M&S Bank under the renegotiated
Relationship Agreement which will be recognised as a reduction to income over the
term of contract.
Costs of £33.1m have been recognised in the period, predominantly relating to the
continued settlement of the deficit and a one-off fee in the period. Total programme
costs to date are £53.6m with future net charges of c.£78.5m expected over the next five
financial years. The charge in the period and total programme costs reflect the latest
position of fees payable to M&S Bank under the renegotiated Relationship Agreement.
All of these costs are considered to be adjusting items as they are significant in
quantum and have crystallised as a result of major business change linked to M&S
Bank. Recognition of these costs within adjusting items is consistent with the
disclosure of costs relating to the deficit previously recognised within adjusting
items. Furthermore these costs are significant in value to the results of both the
Group and to the ‘all other segments’ segment.
Net pension finance (charge)/income (£5.0m)
In the period a net finance cost of £5.0m was recognised. The net pension finance
income or expense can fluctuate significantly each year due to changes in external
market factors that are outside management’s control. Furthermore, as the scheme
is now closed, it is not considered to be part of the ongoing operating activities of the
Group. Therefore, consistent with how management assesses the performance of the
business, the net pension finance income is considered to be an adjusting item.
| 2026 | 2025 | |
| £m | £m | |
Bank and other interest receivable | 39.3 | 54.9 |
Interest income of subleases | 5.7 | 5.7 |
Finance income before adjusting items | 45.0 | 60.6 |
Finance income in adjusting items (see note 5) | — | 4.1 |
Finance income | 45.0 | 64.7 |
Other finance costs | (12.2) | (4.6) |
Interest payable on syndicated bank facility | (3.9) | (4.6) |
Interest payable on Medium-Term Notes | (30.6) | (36.7) |
Interest payable on lease liabilities | (150.8) | (115.9) |
Unwind of discount on provisions (see note 22) | (9.2) | (6.4) |
Unwind of discount on Partnership liability to the Marks & Spencer UK Pension Scheme (see note 12) | — | (1.4) |
Finance costs before adjusting items | (206.7) | (169.6) |
Finance costs in adjusting items (see note 5) | (10.4) | (7.6) |
Finance costs | (217.1) | (177.2) |
Net finance costs | (172.1) | (112.5) |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 133
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
7 Income tax expense
A. Taxation charge
| 2026 | 2025 | |
| £m | £m | |
| Current tax | ||
| UK corporation tax on profits for the year at 25% (last year: 25%) | ||
– current year | 36.6 | 157. 2 |
– adjustments in respect of prior years | 1.1 | (0.3) |
UK current tax | 37.7 | 156.9 |
| Overseas current taxation | ||
– current year | 4.3 | 6.5 |
– adjustments in respect of prior years | (1.1) | (0.5) |
Total current taxation | 40.9 | 162.9 |
| Deferred tax | ||
– origination and reversal of temporary differences | 68.2 | 49.9 |
– adjustments in respect of prior years | 19.3 | 7.0 |
– changes in tax rate | — | 0.1 |
Total deferred tax (see note 23) | 87.5 | 57.0 |
Total income tax expense | 128.4 | 219.9 |
B. Taxation reconciliation
The effective tax rate was 35.2% (last year: 43.0%) and is explained below.
| 2026 | 2025 | |
| £m | £m | |
Profit before tax | 364.6 | 511.8 |
| Notional taxation at standard UK corporation tax rate of 25% | ||
(last year: 25%) | 91.2 | 128.0 |
Depreciation and other amounts in relation to land and buildings that do not qualify for tax relief | (13.0) | (3.9) |
| Depreciation and other amounts in relation to other fixed | ||
assets that do not qualify for tax relief | 3.2 | 13.5 |
Other income and expenses that are not taxable or allowable for tax purposes | 2.7 | (6.6) |
Joint venture results accounted for as profit after tax | (0.1) | 7.1 |
Overseas profits taxed at rates different to those of the UK | (1.0) | (3.0) |
Movement in unrecognised deferred tax assets | 6.8 | 0.1 |
Controlled Foreign Companies charge | 1.0 | 1.3 |
Pillar Two top-up tax | 0.5 | 0.3 |
Adjustments to the current and deferred tax charges in respect of prior periods | 19.3 | 6.2 |
| Adjusting items: | ||
– UK store and strategic programme impairments and disposals where no tax relief is available | 5.6 | 5.8 |
– cost incurred on acquisition of Gist | 0.9 | 1.9 |
– other strategic programme income and expenses that are not taxable or allowable for tax purposes | 7.0 | 6.6 |
– amortisation arising as a part of the investment in Ocado Retail Limited | — | 3.2 |
– derecognition of deferred tax assets on tax losses | 1.7 | — |
| – one-off fair value adjustment relating to Ocado | ||
Retail Limited | 4.4 | — |
| – joint venture results accounted for as profit after tax/ | ||
(Release of Ocado contingent consideration) | — | 0.5 |
– impairment of investment in Ocado Retail Limited | — | 62.1 |
| – adjustments to the land and buildings deferred tax due | ||
to adjusting items | (1.8) | (3.2) |
Total income tax expense | 128.4 | 219.9 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026134
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
7 Income tax expense continued
B. Taxation reconciliation continued
The effective tax rate in respect of the M&S Group adjusted profit was 27.5%
(last year: 26.7%).
C. Current tax reconciliation
The current tax reconciliation shows the tax effect of the main adjustments made to
the Group’s accounting profits in order to arrive at its taxable profits. The reconciling
items differ from those in note 7B as the effects of deferred tax temporary
differences are ignored below.
| 2026 | 2025 | |
| £m | £m | |
Profit before tax | 364.6 | 511.8 |
| Notional taxation at standard UK corporation tax rate of 25% | ||
(last year: 25%) | 91.2 | 128.0 |
Disallowable accounting depreciation and other similar items | 86.9 | 68.4 |
Deductible capital allowances | (175.5) | (122.9) |
Adjustments in relation to employee share schemes | (5.5) | 8.9 |
Adjustments in relation to employee pension schemes | (1.5) | (0.2) |
Overseas profits taxed at rates different to those of the UK | (1.0) | (3.0) |
Joint venture results accounted for as profit after tax | (0.1) | 7.1 |
Utilisation or increase of unrecognised losses | 12.3 | 0.1 |
Other income and expenses that are not taxable or allowable | 2.8 | (3.9) |
Controlled Foreign Companies | 1.0 | 1.3 |
BEPS – Pillar Two top-up tax | 0.5 | 0.3 |
| Adjusting items: | ||
– UK store and strategic programme impairments and disposals where no tax relief is available | 11.7 | 6.3 |
– employee pension scheme | 1.2 | (1.0) |
– UK store estate lease surrender payments | 5.9 | 4.8 |
– other strategic programme income and expenses that are not taxable or allowable for tax purposes | 1.1 | 1.8 |
– cost incurred on acquisition of Gist | 0.9 | 1.9 |
– amortisation arising as a part of the investment in Ocado Retail Limited | — | 3.2 |
| – joint venture results accounted for as profit after tax/ | ||
(Release of Ocado contingent consideration) | — | 0.5 |
– impairment of investment in Ocado JV | — | 62.1 |
– Ocado acquisition PPA amortisation non-deductible for current tax purposes | 4.6 | — |
| – one-off fair value adjustment relating to Ocado Retail | ||
Limited not deductible for current tax purposes | 4.4 | — |
Current year current tax charge | 40.9 | 163.7 |
| Represented by: | ||
UK current year current tax | 36.6 | 157.2 |
Overseas current year current tax | 4.3 | 6.5 |
40.9 | 163.7 | |
UK adjustments in respect of prior years | 1.1 | (0.3) |
Overseas adjustments in respect of prior years | (1.1) | (0.5) |
Total current taxation (note 7A) | 40.9 | 162.9 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 135
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
8 Earnings per share
The calculation of earnings per ordinary share is based on earnings after tax and the
weighted average number of ordinary shares in issue during the year.
The adjusted earnings per share figures have also been calculated based on earnings
before adjusting items that are significant in nature and/or quantum and are considered
distortive to underlying results (see note 5). These have been presented to provide
shareholders with an additional measure of the Group’s year-on-year performance.
For diluted earnings per share, the weighted average number of ordinary shares in
issue is adjusted to assume conversion of all dilutive potential ordinary shares. The
Group has four types of dilutive potential ordinary shares, being: those share options
granted to employees where the exercise price is less than the average market price
of the Company’s ordinary shares during the year; unvested shares granted under
the Deferred Share Bonus Plan; unvested shares granted under the Restricted Share
Plan; and unvested shares within the Performance Share Plan that have met the
relevant performance conditions at the end of the reporting period.
Details of the adjusted earnings per share are set out below:
| 2026 | 2025 | |
| £m | £m | |
Profit attributable to equity shareholders of the Company | 259.4 | 295.7 |
| Add/(less): | ||
Adjusting items (see note 5) | 280.5 | 363.7 |
Tax on adjusting items | (53.2) | (14.0) |
| Profit before adjusting items attributable to equity | ||
shareholders of the Company | 486.7 | 645.4 |
Million | Million | |
Weighted average number of ordinary shares in issue | 2,041.4 | 2,021.9 |
| Potentially dilutive share options under Group’s share | ||
option schemes | 73.9 | 88.8 |
Weighted average number of diluted ordinary shares | 2,115.3 | 2,110.7 |
Pence | Pence | |
Basic earnings per share | 12.7 | 14.6 |
Diluted earnings per share | 12.3 | 14.0 |
Adjusted basic earnings per share | 23.8 | 31.9 |
Adjusted diluted earnings per share | 23.0 | 30.6 |
9 Dividends
| 2026 | 2025 | 2026 | 2025 | |
| per share | per share | £m | £m | |
| Dividends on equity ordinary shares | ||||
Paid final dividend | 2.6p | 2.0p | 52.4 | 40.2 |
Paid interim dividend | 1.2p | 1.0p | 24.6 | 20.3 |
3.8p | 3.0p | 77.0 | 60.5 |
The directors have approved a final dividend of 3. 0 p per share (last year: 2.6p per share),
which, in line with the requirements of IAS 10: Events after the Reporting Period, has
not been recognised within these results. This final dividend of c.£62.0m (last year:
£52.4m) will be paid on 10 July 2026 to shareholders whose names are on the Register
of Members at the close of business on 5 June 2026. The ordinary shares will be
quoted ex-dividend on 4 June 2026.
A dividend reinvestment plan (DRIP) is available to shareholders who would prefer to
invest their dividends in the shares of the Company. For those shareholders electing
to receive the DRIP, the last date for receipt of a new election is 19 June 2026.
10 Employees
A. Aggregate remuneration
The aggregate remuneration and associated costs of Group employees (including the
Executive Committee) were:
| 2026 | 2025 | |
| Total | Total | |
| £m | £m | |
Wages and salaries | 2,048.6 | 1,835.8 |
Social security costs | 199.1 | 151.2 |
Pension costs | 122.9 | 112.7 |
Share-based payments (see note 13) | 38.8 | 44.4 |
Employee welfare and other personnel costs | 41.0 | 51.2 |
Capitalised staffing costs | (5.7) | (26.7) |
Total aggregate remuneration 1 | 2,444.7 | 2,168.6 |
1 Excludes amounts recognised within adjusting items of £2.1m cost (last year: £5.2m cost)
(see notes 3 and 5).
Details of key management compensation are given in note 28.
Marks and Spencer Group plc Annual Report and Financial Statements 2026136
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
10 Employees continued
B. Average monthly number of employees
2026 | 2025 | |
| UK stores | ||
– management and supervisory categories | 4,672 | 4,847 |
– other UK support centre | 50,794 | 51,520 |
– management and supervisory categories | 4,182 | 3,725 |
– other UK operations | 1,101 | 898 |
– management and supervisory categories | 834 | 759 |
– other | 6,895 | 6,544 |
Overseas | 4,823 | 5,040 |
Total average number of employees | 73,301 | 73,333 |
If the number of hours worked was converted on the basis of a normal working week,
the equivalent average number of full-time employees would have been 51,405 (last
year: 51,279).
Marks and Spencer Group plc Annual Report and Financial Statements 2026 137
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
11 Retirement benefits continued
| 2026 | 2025 | |
| £m | £m | |
Total market value of assets 1 | 5,142.9 | 5,327. 3 |
Present value of scheme liabilities 1 | (5,175.3) | (5,409.5) |
Scheme Liability | (32.4) | (82.2) |
Asset ceiling adjustment | (43.4) | (36.7) |
Net funded pension plan liability | (75.8) | (118.9) |
Unfunded retirement benefits | (1.8) | (2.1) |
Post-retirement healthcare | (1.6) | (1.7) |
Net retirement benefit deficit | (79.2) | (122.7) |
| Analysed in the statement of financial position as: | ||
Retirement benefit deficit | (79.2) | (122.7) |
Net retirement benefit deficit | (79.2) | (122.7) |
| 2026 | 2025 | |
| £m | £m | |
Fair value of scheme assets at start of year 1 | 5,327.3 | 6,149.9 |
Interest income based on discount rate | 294.7 | 283.4 |
| Actual return on scheme assets excluding amounts included | ||
in net interest income 2 | (173.4) | (722.9) |
Employer contributions 3 | 45.3 | (49.3) |
Benefits paid | (346.7) | (327.7) |
Administrative costs | (5.7) | (5.2) |
Exchange movement 1 | 1.4 | (0.9) |
Fair value of scheme assets at end of year 1 | 5,142.9 | 5, 327.3 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026138
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
11 Retirement benefits continued
| 2026 | 2025 | |
| £m | £m | |
Present value of obligation at start of year | 5,413.3 | 6,031.7 |
Current service cost | 0.1 | 0.1 |
Interest cost | 298.4 | 279.3 |
Benefits paid | (346.7) | (327.7) |
Actuarial loss – experience | 19.5 | 111.7 |
Actuarial loss – demographic assumptions | 36.1 | 5.0 |
Actuarial gain – financial assumptions | (242.8) | (684.6) |
Exchange movement | 0.8 | (2.2) |
Present value of obligation at end of year | 5,178.7 | 5,413.3 |
| Analysed as: | ||
Present value of pension scheme liabilities | 5,175.3 | 5,409.5 |
Unfunded pension plans | 1.8 | 2.1 |
Post-retirement healthcare | 1.6 | 1.7 |
Present value of obligation at end of year | 5,178.7 | 5,413.3 |
2026 | 2025 (Restated) 2 | |||||
| Quoted | Unquoted | Total | Quoted | Unquoted | Total | |
| £m | £m | £m | £m | £m | £m | |
| Debt investments | ||||||
| – Government bonds | ||||||
| net of repurchase | ||||||
agreements 1 | 3,137.2 | (1,714.8) | 1,422.4 | 3,283.6 | (1,855.8) | 1,427.8 |
– Corporate bonds | — | 213.1 | 213.1 | 11.0 | 87.9 | 98.9 |
| – Asset-backed | ||||||
securities and structured debt | 103.5 | 47.9 | 151.4 | — | 220.8 | 220.8 |
| Equity Investments | ||||||
– Developed Markets | 12.8 | — | 12.8 | 14.2 | — | 14.2 |
| Growth asset funds | ||||||
– Global property | — | 112.9 | 112.9 | — | 159.5 | 159.5 |
– Hedge and reinsurance | 6.2 | 294.1 | 300.3 | 5.8 | 295.9 | 301.7 |
– Private equity and infrastructure | — | 99.6 | 99.6 | — | 128.9 | 128.9 |
| Derivatives | ||||||
| – Interest and inflation | ||||||
rate swaps | 28.9 | — | 28.9 | 21.5 | — | 21.5 |
| – Foreign exchange | ||||||
contracts and other derivatives | (7.2) | — | (7.2) | 23.3 | — | 23.3 |
| Cash and cash | ||||||
equivalents | 175.1 | — | 175.1 | 162.7 | — | 162.7 |
Other – Buy-in insurance | — | 1,704.1 | 1,704.1 | — | 1,802.3 | 1,802.3 |
| – Secure income | ||||||
asset funds | — | 929.5 | 929.5 | — | 965.7 | 965.7 |
Total | 3,456.5 | 1,686.4 | 5,142.9 | 3,522.1 | 1,805.2 | 5, 327.3 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 139
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
11 Retirement benefits continued
D. Analysis of assets continued
| 2026 | 2025 | |
| % | % | |
Rate of increase in pensions in payment | 2.1-3.0 | 2.0-3.0 |
Discount rate | 6.25 | 5.75 |
Inflation rate (RPI) | 3.25 | 3.10 |
Long-term healthcare cost increases | 7.25 | 7.10 |
2026 | 2025 | ||
Current pensioners (at age 65) | – male | 22.9 | 22.5 |
– female | 24.2 | 23.9 | |
| Future pensioners – currently in deferred status | |||
(atage 65) | – male | 24.1 | 23.7 |
– female | 25.6 | 25.3 |
| 2026 | 2025 | |
| £m | £m | |
Decrease in scheme surplus caused by a decrease in the discount rate of 0.25% | (25.0) | (20.0) |
Increase in scheme surplus caused by an increase in the discount rate of 0.25% | 20.0 | 15.0 |
Decrease in scheme surplus caused by a decrease in the discount rate of 1.0% | (90.0) | (80.0) |
Increase in scheme surplus caused by an increase in the discount rate of 1.0% | 85.0 | 70.0 |
Decrease in scheme surplus caused by a decrease in the inflation rate of 0.25% | (15.0) | (10.0) |
Decrease in scheme surplus caused by a decrease in the inflation rate of 0.5% | (30.0) | (20.0) |
Increase in scheme surplus caused by decrease in the average life expectancy of one year | 110.0 | 110.0 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026140
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
11 Retirement benefits continued
| 2026 | 2025 | |
| £m | £m | |
Current service cost | 0.1 | 0.1 |
Administration costs | 5.7 | 5.2 |
Net interest income/(expense) | 5.1 | (4.1) |
Total | 10.9 | 1.2 |
| Remeasurement on the net defined benefit deficit: | ||
| Actual return on scheme assets excluding amounts | ||
included in net interest income | 173.4 | 722.9 |
Actuarial loss – demographic assumptions | 36.1 | 5.0 |
Actuarial loss – experience | 19.5 | 111.7 |
Actuarial gain – financial assumptions | (242.8) | (684.6) |
Change in asset ceiling | 4.8 | (5.8) |
| Components of defined benefit (income)/expense | ||
recognised in other comprehensive income | (9.0) | 149.2 |
12 Marks and Spencer Scottish Limited Partnership
Marks and Spencer plc is a general partner and the Marks & Spencer UK Pension
Scheme is a limited partner of the Marks and Spencer Scottish Limited Partnership
(the “Partnership”). Under the Partnership agreement, the limited partners have no
involvement in the management of the business and shall not take any part in the
control of the Partnership. The general partner is responsible for the management
and control of the Partnership and as such, the Partnership is consolidated into the
results of the Group.
The Partnership holds £1.2bn (last year: £1.3bn) of properties at book value which
have been leased back to Marks and Spencer plc. The Group retains control over
these properties, including the flexibility to substitute alternative properties into
the Partnership.
In February 2025 the Group and the Pension Scheme Trustees agreed a change to
the Partners’ entitlements to distributions from the Partnership. The first limited
Partnership interest and second limited Partnership interest were replaced by a third
limited Partnership interest.
The Pension Scheme received £45.0m in June 2025 in respect of the third Partnership
interest and is entitled to receive a further £45.0m in June 2026, £55.0m in June 2027
and June 2028. From June 2029 to June 2035 the Pension Scheme is entitled to receive
either £55.0m or £nil, depending on the funding level of the Pension Scheme as at
the latest reporting date. Under certain circumstances these amounts may be
retained in the Partnership, with the distribution determined by the future funding
position of the Pension Scheme.
During the year to 28 March 2026 an interest charge of £nil (last year: £1.4m) was
recognised in the income statement representing the unwinding of the discount
included in the obligation that was previously recognised in respect of the first
Partnership interest, which was included as a financial liability in the Group’s financial
statements prior to its replacement as it was a transferable financial instrument and
measured at amortised cost, being the net present value of the future expected
distributions from the Partnership.
The third Partnership interest is not a transferable financial instrument as the
Scheme Trustee does not have the right to transfer it to any party other than a
successor Trustee. It is therefore not included as a plan asset within the UK DB
Pension Scheme surplus reported in accordance with IAS 19. Similarly, the associated
liability is not included on the Group’s statement of financial position, rather the
annual distribution is recognised as a contribution to the scheme each year.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 141
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
13 Share-based payments
This year a charge of £38.8m was recognised for share-based payments (last year:
£44.4m). Of the total share-based payments charge, £9.7m (last year: £8.4m) relates
to the UK Save As You Earn Share Option scheme, £7.6m (last year: £15.0m) relates to
Performance Share Plans, £3.6m (last year: £2.8m) relates to Restricted Share Plans
and £17.9m relates to Deferred Share Bonus Schemes (last year: £18.2m).
In addition, a charge of £nil was recognised in relation to Annual Bonus Schemes under
the Deferred Share Bonus Scheme (last year: £8.0m). Further details of the option
and share schemes that the Group operates are provided in the Remuneration Report.
A. Save As You Earn scheme – £9.7m
The Save As You Earn (SAYE) scheme was approved by shareholders for a further
10 years at the 2017 Annual General Meeting (AGM). Under the terms of the scheme,
the Board may offer options to purchase ordinary shares in the Company once in
each financial year to those employees who enter into an His Majesty’s Revenue &
Customs (HMRC) approved SAYE savings contract. The scheme allows participants
to save up to a maximum of £500 (last year: £500) each month. The price at which
options may be offered is 80% of the average mid-market price for the three
consecutive dealing days preceding the offer date. The options may normally be
exercised during the six-month period after the completion of the SAYE contract.
2026 | 2025 | |||
| Weighted | Weighted | |||
| Number of | average | Number of | average | |
| options | exercise price | options | exercise price | |
| Outstanding at beginning | ||||
of year | 42,432,320 | 209.3p | 46,087, 264 | 143.2p |
Granted | 7,684,853 | 310.0p | 15,194,241 | 303.0p |
Exercised | (10,307,279) | 115.1p | (14,624,581) | 108.0p |
Forfeited | (3,993,654) | 252.0p | (3,573,848) | 191.7p |
Expired | (268,013) | 191.9p | (650,756) | 93.2p |
Outstanding at end of year | 35,548,227 | 253.7p | 42,432,320 | 209.3p |
Exercisable at end of year | 2,338,218 | 114.0p | 1,944,316 | 186.3p |
For SAYE share options exercised during the period, the weighted average share price
at the date of exercise was 376.6p (last year: 299.9p).
The fair values of the options granted during the year have been calculated using the
Black-Scholes model assuming the inputs shown below:
| 2026 | 2025 | |
| 3-year plan | 3-year plan | |
Grant date | Dec 25 | Dec 24 |
Share price at grant date | 387p | 379p |
Exercise price | 310p | 303p |
Option life in years | 3 years | 3 years |
Risk-free rate | 3.8% | 4.1% |
Expected volatility | 28.6% | 33.5% |
Expected dividend yield | 0.9% | 0.9% |
Fair value of option | 114p | 121p |
Volatility has been estimated by taking the historical volatility in the Company’s
share price over a three-year period.
The resulting fair value is expensed over the service period of three years on the
assumption that 30% (last year: 30%) of options will lapse over the service period as
employees leave the Group.
Outstanding options granted under the UK Employee SAYE scheme are as follows:
| Weighted average remaining | |||||
| Number of options | contractual life (years) | ||||
Options granted 1 | 2026 | 2025 | 2026 | 2025 | Option price |
February 2021 | — | 32,266 | — | (0.7) | 82p |
February 2022 | 12,379 | 1,840,721 | (0.7) | 0.3 | 189p |
February 2023 | 2,333,389 | 11,306,393 | 0.3 | 1.3 | 99p |
February 2024 | 13,404,448 | 14,687,727 | 1.3 | 2.3 | 204p |
February 2025 | 12,479,135 | 14,565,213 | 2.3 | 3.3 | 303p |
February 2026 | 7,318,876 | — | 3.3 | — | 310p |
35,548,227 | 42,432,320 | 2.0 | 2.3 | 254p |
1 For the purpose of the above table, the option granted date is the contract start date.
Marks and Spencer Group plc Annual Report and Financial Statements 2026142
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
13 Share-based payments continued
B. Performance Share Plan* – £7.6m
The Performance Share Plan (PSP) is the primary long-term incentive plan for
approximately 150 of the most senior managers within the Group. It was first
approved by shareholders at the 2005 AGM and most recently at the 2025 AGM.
Under the plan, annual awards, based on a percentage of salary, may be offered. The
extent to which an award vests is measured over a three-year period against financial
targets which for 2025/26 included Earnings Per Share (EPS), Return on Capital
Employed (ROCE), Total Shareholder Return (TSR) and strategic measures. The value
of any dividends earned on the vested shares during the three years may also be paid
on vesting. Further details are set out in the Remuneration Report. Awards under this
plan have been made in each year since 2005. More information is available in
relation to this plan within the Remuneration Report.
During the year, 9,085,398 shares (last year: 9,450,064) were awarded under the plan.
The weighted average fair value of the shares awarded was 348p (last year: 289p).
As at 28 March 2026, 24,794,567 shares (last year: 35,353,856) were outstanding under
the plan.
Movement during the year of share options granted under the PSP Scheme are as follows:
2026 | 2025 | |
| Number of | Number of | |
| options | options | |
Outstanding at beginning of the year | 35,353,856 | 41,854,500 |
Granted | 9,085,398 | 9,450,064 |
Exercised | (13,753,253) | (12,196,576) |
Lapsed | (5,891,434) | (3,754,132) |
Outstanding at end of year | 24,794,567 | 35,353,856 |
C. Deferred Share Bonus Plan* – £17.9m
The Deferred Share Bonus Plan (DSBP) was first introduced in 2005/06 as part of the
Annual Bonus Scheme and was most recently approved by shareholders at the 2025
AGM. It may be operated for approximately 5,245 of the most senior managers within
the Group. As part of the plan, the managers are required to defer a proportion of
any bonus paid into shares which will be held for three years. There are no further
performance conditions on these shares, other than continued employment within
the Group and the value of any dividends earned on the vested shares during the
deferred period may also be paid on vesting. More information is available in relation
to this plan within the Remuneration Report.
During the year, 11,709,110 shares (last year: 13,079,225) have been awarded under the
plan in relation to the annual bonus. As at 28 March 2026, 34,372,772 shares (last year:
48,494,977) were outstanding under the plan.
D. Restricted Share Plan* – £3.6m
The Restricted Share Plan (RSP) was established in 2000 as part of the reward
strategy for retention and recruitment of senior managers who are vital to the
success of the business and the plan was most recently approved by shareholders at
the 2025 AGM. The plan operates for the senior management team. Awards vest at
the end of the restricted period (typically between one and three years) subject to
the participant still being in employment of the Company on the relevant vesting
date. The value of any dividends earned on the vested shares during the restricted
period may also be paid on vesting. More information is available in relation to this
plan within the Remuneration Report.
During the year, 755,374 shares (last year: 1,713,749) have been awarded under the
plan. The weighted average fair value of the shares awarded was 346p (last year:
340p). As at 28 March 2026, 1,382,005 shares (last year: 2,296,945) were outstanding
under the plan.
E. Marks and Spencer Employee Benefit Trust
The Marks and Spencer Employee Benefit Trust (the Trust) holds 11,557,288 (last year:
40,584,818) shares with a book value of £0.1m (last year: £0.4m) and a market value of
£37.7m (last year: £143.9m). These shares were acquired by the Trust in the market and
are shown as a reduction in retained earnings in the consolidated statement of
financial position. Awards are granted to employees at the discretion of Marks and
Spencer plc and the Trust agrees to satisfy the awards in accordance with the wishes
of Marks and Spencer plc under senior executive share schemes. Dividends are
waived on all of these shares.
F. ShareBuy
ShareBuy, the Company’s Share Incentive Plan, enables the participants to buy
shares directly from their gross salary. This scheme does not attract an IFRS 2 charge.
* All awards both this year and last year were conditional shares. For the purposes of calculating the
number of shares awarded, the share price used is the average of the mid-market price for the five
consecutive dealing days preceding the grant date.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 143
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
| Computer | ||||||
| software | ||||||
| Customer | Computer | under | ||||
| Goodwill | Brands | relationships | software | development | Total | |
| £m | £m | £m | £m | £m | £m | |
| At 30 March 2024 | ||||||
Cost | 140.6 | 118.7 | — | 1,702.5 | 78.8 | 2,040.6 |
Accumulated amortisation, impairments and disposals | (112.2) | (114.4) | — | (1,602.4) | (32.1) | (1,861.1) |
Net book value | 28.4 | 4.3 | — | 100.1 | 46.7 | 179.5 |
| Year ended 29 March 2025 | ||||||
Opening net book value | 28.4 | 4.3 | — | 100.1 | 46.7 | 179.5 |
Additions | — | — | — | 2.0 | 96.5 | 98.5 |
Transfers and reclassifications | — | — | — | 103.4 | (125.9) | (22.5) |
Disposals | — | — | — | (3.3) | — | (3.3) |
Amortisation charge | — | (0.7) | — | (63.8) | — | (64.5) |
Exchange difference | — | — | — | (0.3) | — | (0.3) |
Closing net book value | 28.4 | 3.6 | — | 138.1 | 17. 3 | 187.4 |
| At 29 March 2025 | ||||||
Cost | 140.6 | 118.7 | — | 1,807.9 | 49.4 | 2,116.6 |
Accumulated amortisation, impairments and disposals | (112.2) | (115.1) | — | (1,669.8) | (32.1) | (1,929.2) |
Net book value | 28.4 | 3.6 | — | 138.1 | 17. 3 | 187.4 |
| Year ended 28 March 2026 | ||||||
Opening net book value | 28.4 | 3.6 | — | 138.1 | 17.3 | 187.4 |
Additions | — | — | — | 1.0 | 51.3 | 52.3 |
Acquired through business combinations 1 | 284.5 | 228.7 | 50.4 | 12.5 | 0.4 | 576.5 |
Transfers and reclassifications | — | — | — | 27.8 | (2.6) | 25.2 |
Disposals | — | — | — | (1.7) | — | (1.7) |
Amortisation charge | — | (6.4) | (5.1) | (72.9) | — | (84.4) |
Exchange difference | (1.1) | — | — | (0.1) | — | (1.2) |
Closing net book value | 311.8 | 225.9 | 45.3 | 104.7 | 66.4 | 754.1 |
| At 28 March 2026 | ||||||
Cost | 424.0 | 347.4 | 50.4 | 1,849.1 | 98.5 | 2,769.4 |
Accumulated amortisation, impairments and disposals | (112.2) | (121.5) | (5.1) | (1,744.4) | (32.1) | (2,015.3) |
Net book value | 311.8 | 225.9 | 45.3 | 104.7 | 66.4 | 754.1 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026144
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
14 Intangible assets continued
| Ocado | ||||||
| Retail | Sports | Total | ||||
| per una | Limited | India | Edit | Other | Goodwill | |
| £m | £m | £m | £m | £m | £m | |
Net book value at 29 March 2025 | 16.5 | — | 6.4 | 4.8 | 0.7 | 28.4 |
Acquired through business combinations 1 | — | 284.5 | — | — | — | 284.5 |
Exchange difference | — | — | (1.1) | — | — | (1.1) |
Net book value at 28 March 2026 | 16.5 | 284.5 | 5.3 | 4.8 | 0.7 | 311.8 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 145
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
14 Intangible assets continued
Goodwill impairment testing continued
15 Property, plant and equipment
The Group’s property, plant and equipment of £6,409.3m (last year: £5,408.5m)
consists of owned assets of £4,389.9m (last year: £3,910.9m) and right-of-use assets
of £2,019.4m (last year: £1,497.6m).
| Fixtures, | Assets in the | |||
| Land and | fittings and | course of | ||
| buildings | equipment | construction | Total | |
| £m | £m | £m | £m | |
| At 30 March 2024 | ||||
Cost | 2,852.7 | 5,709.5 | 148.8 | 8,711.0 |
Accumulated depreciation, impairments and disposals | (843.8) | (4,088.1) | (18.3) | (4,950.2) |
Net book value | 2,008.9 | 1,621.4 | 130.5 | 3,760.8 |
| Year ended 29 March 2025 | ||||
Opening net book value | 2,008.9 | 1,621.4 | 130.5 | 3,760.8 |
Additions | 5.1 | 27.7 | 457.8 | 490.6 |
Transfers and reclassifications | 33.9 | 302.3 | (315.1) | 21.1 |
Disposals | (33.8) | (29.8) | — | (63.6) |
Impairment reversals | 8.5 | 10.9 | — | 19.4 |
Impairment charge | (33.3) | (14.7) | — | (48.0) |
Depreciation charge | (7.9) | (257.4) | — | (265.3) |
Exchange difference | (2.5) | (1.6) | — | (4.1) |
Closing net book value | 1,978.9 | 1,658.8 | 273.2 | 3,910.9 |
| At 29 March 2025 | ||||
Cost | 2,786.4 | 5,746.8 | 291.5 | 8,824.7 |
Accumulated depreciation, impairments and disposals | (807.5) | (4,088.0) | (18.3) | (4,913.8) |
Net book value | 1,978.9 | 1,658.8 | 273.2 | 3,910.9 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026146
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
15 Property, plant and equipment continued
Property, plant and equipment – owned continued
| Fixtures, | Assets in the | |||
| Land and | fittings and | course of | ||
| buildings | equipment | construction | Total | |
| £m | £m | £m | £m | |
| Year ended 28 March 2026 | ||||
Opening net book value | 1,978.9 | 1,658.8 | 273.2 | 3,910.9 |
Additions | 4.8 | 36.3 | 610.1 | 651.2 |
| Acquired through business | ||||
combinations | 167.0 | 67.6 | 0.2 | 234.8 |
Transfers and reclassifications | 49.7 | 480.0 | (561.9) | (32.2) |
Disposals | (27.1) | (15.3) | — | (42.4) |
Impairment reversals | 16.1 | 10.3 | — | 26.4 |
Impairment charge | (14.7) | (11.4) | — | (26.1) |
Depreciation charge | (55.8) | (281.7) | (0.2) | (337.7) |
Exchange difference | 4.3 | 0.1 | 0.6 | 5.0 |
Closing net book value | 2,123.2 | 1,944.7 | 322.0 | 4,389.9 |
| At 28 March 2026 | ||||
Cost | 2,984.1 | 4,933.1 | 322.0 | 8,239.2 |
Accumulated depreciation, impairments and disposals | (860.9) | (2,988.4) | — | (3,849.3) |
Net book value | 2,123.2 | 1,944.7 | 322.0 | 4,389.9 |
Right-of-use assets
Set out below are the carrying amounts of right-of-use assets recognised and the
movements during the period:
| Fixtures, | |||
| Land and | fittings and | ||
| buildings | equipment | Total | |
| Right-of-use assets | £m | £m | £m |
At 31 March 2024 | 1,371.5 | 57.8 | 1,429.3 |
Additions | 215.3 | 44.7 | 260.0 |
Transfers and reclassifications | 1.5 | — | 1.5 |
Disposals | (2.7) | — | (2.7) |
Impairment reversals | 1.2 | 3.1 | 4.3 |
Impairment charge | (14.9) | (32.1) | (47.0) |
Depreciation charge | (141.0) | (1.0) | (142.0) |
Exchange difference | (5.8) | — | (5.8) |
At 29 March 2025 | 1,425.1 | 72.5 | 1,497.6 |
Additions | 364.7 | 139.7 | 504.4 |
Acquired through business combinations | 243.0 | 89.9 | 332.9 |
Transfers and reclassifications | 7.0 | — | 7.0 |
Disposals | (15.5) | — | (15.5) |
Impairment reversals | 30.0 | — | 30.0 |
Impairment charge | (33.8) | — | (33.8) |
Depreciation charge | (230.8) | (66.6) | (297.4) |
Exchange difference | (5.8) | — | (5.8) |
At 28 March 2026 | 1,783.9 | 235.5 | 2,019.4 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 147
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
15 Property, plant and equipment continued
Marks and Spencer Group plc Annual Report and Financial Statements 2026148
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
15 Property, plant and equipment continued
| 16 Other financial assets | ||
| 2026 | 2025 | |
| £m | £m | |
| Non-current | ||
Other investments¹ | 42.2 | 21.3 |
42.2 | 21.3 | |
| Current | ||
Other investments 2, 3 | 12.9 | 286.5 |
Unlisted investments | — | 3.0 |
12.9 | 289.5 | |
1 | Includes £16.1m (last year: £11.5m) of venture capital investments managed by True Capital Limited | |
| and £26.1m (last year: £9.8m) of Eurochange RCF figure. | ||
2 | Includes £5.9m (last year: £5.3m) of money market deposits held by Marks and Spencer plc in an | |
| escrow account. | ||
3 | Includes £nil (last year: £274.5m) of money market funds due to mature in >90 days. |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 149
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
| 2026 | 2025 | |
| £m | £m | |
| Non-current | ||
Lease receivables – net of provision for impairment | 61.5 | 63.7 |
Other receivables | 25.7 | 27.1 |
Loans to related parties (see note 28) | — | 100.7 |
Prepayments | 191.8 | 191.3 |
279.0 | 382.8 | |
| Current | ||
Trade receivables | 192.8 | 140.6 |
Less: provision for impairment of receivables | (6.2) | (0.9) |
Trade receivables – net | 186.6 | 139.7 |
Lease receivables – net of provision for impairment | 2.2 | 0.4 |
Other receivables | 55.3 | 39.1 |
Prepayments | 185.6 | 127.1 |
Accrued income | 97.0 | 21.2 |
526.7 | 327.5 |
| 2026 | 2025 | |
| £m | £m | |
| Timing of cash flows | ||
Within one year | 7.8 | 6.1 |
Between one and two years | 7.8 | 7.8 |
Between two and three years | 7.8 | 7.8 |
Between three to four years | 9.4 | 7.8 |
Between four to five years | 9.4 | 9.4 |
More than five years | 86.7 | 96.1 |
Total undiscounted cash flows | 128.9 | 135.0 |
Effect of discounting | (51.0) | (56.7) |
Present value of lease payments receivable | 77.9 | 78.3 |
Less: provision for impairment of receivables | (14.2) | (14.2) |
Net investment in the lease | 63.7 | 64.1 |
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
| 2026 | 2025 | |
| £m | £m | |
| Current | ||
Trade payables | 1,051.9 | 796.3 |
Other payables | 519.4 | 579.3 |
Social security and other taxes | 95.9 | 83.6 |
Contract liabilities from gift card sales | 234.8 | 215.1 |
Accruals | 676.6 | 653.1 |
Deferred income | 57.4 | 42.9 |
2,636.0 | 2,370.3 | |
| Non-current | ||
Other payables | 17.6 | 1.1 |
Deferred income | 13.0 | 17.8 |
30.6 | 18.9 |
| 2026 | 2025 | |
| £m | £m | |
Opening balance | 215.1 | 203.2 |
Issues | 509.0 | 461.1 |
| Released to the income statement in respect of gift cards | ||
and vouchers issued before 29 March 2025 | (122.4) | (128.2) |
| Released to the income statement in respect of gift cards | ||
and vouchers issued after 29 March 2025 | (366.9) | (321.0) |
Closing balance | 234.8 | 215.1 |
| 2026 | 2025 | |
| £m | £m | |
| % of trade payables that were amounts owed under supplier | ||
finance arrangements | 37% | 45% |
| Carrying amount of the financial liabilities that are subject | ||
| to supplier finance arrangements | ||
Presented as part of ‘Trade payables’, including: | 395.8 | 360.3 |
| Trade payables for which suppliers have already received | ||
payment from the finance provider | 350.5 | 313.5 |
Range of payment due dates | Days | Days |
| For liabilities presented as part of ‘Trade payables’: | ||
Liabilities that are part of supplier finance arrangements | 28-75 | 28-75 |
| Comparable trade payables that are not part of supplier | ||
finance arrangements | 28-75 | 28-75 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 151
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
| 2026 | 2025 | |
| £m | £m | |
| Current | ||
Lease liabilities | 290.5 | 228.0 |
4.75% £400m Medium-Term Notes 2025 1,2 | — | 105.7 |
Interest accrued on Medium-Term Notes | 8.2 | 22.1 |
298.7 | 355.8 | |
| Non-current | ||
Other loans | 90.0 | — |
3.75% £300m Medium-Term Notes 2026 1 | — | 109.2 |
3.25% £250m Medium-Term Notes 2027 1 | 56.8 | 249.3 |
5.125% £300m Medium-Term Notes 2032 | 298.4 | — |
7.125% US$300m Medium-Term Notes 2037 3,4 | 252.1 | 252.0 |
Revaluation of Medium-Term Notes 5 | (36.1) | (21.2) |
Lease liabilities | 2,459.5 | 1,999.4 |
3,120.7 | 2,588.7 | |
Total | 3,419.4 | 2,944.5 |
| 2026 | 2025 | |
| £m | £m | |
Opening lease liabilities | 2,227.4 | 2,211.5 |
Acquired on consolidation of Ocado Retail Limited | 333.8 | — |
Additions | 489.3 | 261.0 |
Interest expense relating to lease liabilities | 150.8 | 120.1 |
Payments | (430.0) | (343.0) |
Disposals | (13.5) | (14.6) |
Exchange difference | (7.8) | (7.6) |
2,750.0 | 2,227.4 | |
Current | 290.5 | 228.0 |
Non-current | 2,459.5 | 1,999.4 |
| 2026 | 2025 | |
| £m | £m | |
Expenses relating to short-term leases | 14.5 | 13.4 |
Expenses relating to low-value assets | 0.1 | 0.1 |
Expenses relating to variable consideration | 6.1 | 5.9 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026152
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Marks and Spencer Group plc Annual Report and Financial Statements 2026 153
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 Financial instruments continued
(a) Liquidity & funding risk continued
| Total | |||||||
| borrowings | |||||||
| and other | Cash | Cash | Total | ||||
| Other | Medium-Term | Lease | financial | inflow on | outflow on | derivative | |
| loans | Notes | liabilities 1 | liabilities | derivatives 2 | derivatives 2 | liabilities | |
| £m | £m | £m | £m | £m | £m | £m | |
| Timing of cash flows | |||||||
Within one year | — | (143.7) | (291.7) | (435.4) | 1,449.1 | (1,464.5) | (15.4) |
Between one and two years | — | (141.2) | (286.6) | (427.8) | 254.3 | (261.4) | (7.1) |
Between two and five years | — | (310.8) | (614.7) | (925.5) | 49.5 | (51.1) | (1.6) |
More than five years | — | (363.9) | (2,689.7) | (3,053.6) | 363.8 | (389.2) | (25.4) |
Total undiscounted cash flows | — | (959.6) | (3,882.7) | (4,842.3) | 2,116.7 | (2,166.2) | (49.5) |
Effect of discounting | — | 242.5 | 1,655.3 | 1,897.8 | |||
At 29 March 2025 | — | (717.1) | (2,227.4) | (2,944.5) | |||
| Timing of cash flows | |||||||
Within one year | — | (25.5) | (365.3) | (390.8) | 738.6 | (769.1) | (30.5) |
Between one and two years | — | (90.2) | (317.7) | (407.9) | 66.2 | (70.1) | (3.9) |
Between two and five years | — | (94.3) | (781.1) | (875.4) | 94.3 | (100.6) | (6.3) |
More than five years | (199.4) | (668.5) | (3,008.1) | (3,876.0) | 368.5 | (397.8) | (29.3) |
Total undiscounted cash flows | (199.4) | (878.5) | (4,472.2) | (5,550.1) | 1,267.6 | (1,337.6) | (70.0) |
Effect of discounting | 109.4 | 299.1 | 1,722.2 | 2,130.7 | |||
At 28 March 2026 | (90.0) | (579.4) | (2,750.0) | (3,419.4) |
Marks and Spencer Group plc Annual Report and Financial Statements 2026154
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 Financial instruments continued
| Credit rating of counterparty | |||||||||
| AAA | AA+ | AA | AA- | A+ | A | A- | BBB | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Cash and cash equivalents 1 | 98.0 | — | — | 111.6 | 203.2 | 240.6 | 0.8 | — | 654.2 |
Other investments 2 | — | — | — | 146.9 | 49.7 | 89.9 | — | — | 286.5 |
Derivative assets 3 | — | — | — | 2.4 | 3.3 | 1.2 | — | 0.4 | 7.3 |
At 29 March 2025 | 98.0 | — | — | 260.9 | 256.2 | 331.7 | 0.8 | 0.4 | 948.0 |
| AAA | AA+ | AA | AA- | A+ | A | AA- | BBB | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Cash and cash equivalents 1 | 129.7 | — | 0.1 | 130.1 | 290.2 | 225.7 | — | — | 775.8 |
Other investments 2 | — | — | — | 4.3 | 5.3 | — | 3.3 | — | 12.9 |
Derivative assets 3 | — | — | — | 2.6 | 10.1 | 3.9 | — | 1.7 | 18.3 |
At 28 March 2026 | 129.7 | — | 0.1 | 137.0 | 305.6 | 229.6 | 3.3 | 1.7 | 807.0 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 155
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 Financial instruments continued
| Up to 30 days | 31-60 days | 61-90 days | 91-180 days | 181 days or | |||
| Current | past due | past due | past due | past due | more past due | Total | |
| 29 March 2025 | £m | £m | £m | £m | £m | £m | £m |
Gross carrying amount – trade receivables | 127. 8 | 5.2 | 3.3 | 3.3 | 1.0 | — | 140.6 |
Expected loss rate | 0.7% | 0.6% | 0.1% | 0.2% | 0.2% | 100.0% | 0.6% |
Lifetime expected credit loss | 0.9 | — | — | — | — | — | 0.9 |
Net carrying amount | 126.9 | 5.2 | 3.3 | 3.3 | 1.0 | — | 139.7 |
| Up to 30 days | 31-60 days | 61-90 days | 91-180 days | 181 days or | |||
| Current | past due | past due | past due | past due | more past due | Total | |
| 28 March 2026 | £m | £m | £m | £m | £m | £m | £m |
Gross carrying amount – trade receivables | 183.3 | 5.3 | 2.3 | 1.6 | 0.1 | 0.2 | 192.8 |
Expected loss rate | 3.1% | 3.2% | 4.6% | 2.8% | 4.7% | 100.0% | 3.2% |
Lifetime expected credit loss | 5.6 | 0.2 | 0.2 | — | — | 0.2 | 6.2 |
Net carrying amount | 177.7 | 5.1 | 2.1 | 1.6 | 0.1 | — | 186.6 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026156
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 Financial instruments continued
Impairment of financial assets continued
| 2026 | 2025 | |
| Trade receivables expected loss provision | £m | £m |
Opening loss allowance | 0.9 | 1.3 |
| Increase in loss allowance recognised in profit and loss | ||
during the year | 5.6 | — |
Receivables written off during the year as uncollectable | (0.3) | (0.4) |
Closing loss allowance | 6.2 | 0.9 |
| 2026 | 2025 | |
| Lease receivables expected loss provision | £m | £m |
Opening loss allowance | 14.2 | 14.2 |
| Increase in loss allowance recognised in profit and loss | ||
during the year | — | — |
Closing loss allowance 1 | 14.2 | 14.2 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 157
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 Financial instruments continued
(c) Foreign currency risk continued
2026 | 2025 | |||||
| Fixed rate | Floating rate | Total | Fixed rate | Floating rate | Total | |
| £m | £m | £m | £m | £m | £m | |
| Currency | ||||||
Sterling | 2,824.7 | 388.4 | 3,213.1 | 2,725.3 | — | 2,725.3 |
Euro | 137.6 | — | 137.6 | 117.7 | — | 117.7 |
Rupee | 68.4 | — | 68.4 | 100.9 | — | 100.9 |
Other | 0.3 | — | 0.3 | 0.6 | — | 0.6 |
3,031.0 | 388.4 | 3,419.4 | 2,944.5 | — | 2,944.5 |
| 2026 | 2025 | |
| % | % | |
Committed and uncommitted borrowings | N/A | N/A |
Medium-Term Notes | 5.5% | 5.4% |
Other Loans | 8.2% | N/A |
Leases | 4.5% | 5.7% |
Marks and Spencer Group plc Annual Report and Financial Statements 2026158
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 Financial instruments continued
| 29 March 2025 | |||||
Current | Non Current | ||||
| Forward foreign | Forward foreign | Forward foreign | |||
| exchange | exchange | Cross-currency | exchange | Interest | |
| contracts | contracts | swaps | contracts | rate swaps | |
| £m | £m | £m | £m | £m | |
Hedging risk strategy | Cash flow | FVTPL | Cash flow | Cash flow | Fair value |
| hedges | hedges | hedges | hedges | ||
Notional/currency legs | 1,791.6 | 113.8 | 252.9 | 305.2 | — |
Carrying amount assets | 7.2 | — | — | 0.1 | — |
Carrying amount (liabilities) | (24.6) | (0.5) | (10.5) | (6.1) | — |
Maturity date | to Oct 2025 | to Dec 2025 | to Dec 2037 | to May 2026 | — |
Hedge ratio | 100% | N/A | 100% | 100% | N/A |
Description of hedged item | Highly | Inter- | USD fixed | Highly | GBP fixed |
| probable | company | rate | probable | rate | |
| transactional | loans/ | borrowing | transactional | borrowing | |
| FX exposures | deposits | FX exposures | |||
Change in fair value of hedging instrument | 23.5 | 1.1 | (8.5) | 6.4 | — |
Change in fair value of hedged item used to determine hedge effectiveness | (23.5) | (1.7) | 8.5 | (6.4) | — |
Weighted average hedge rate for the year | GBP/USD | — | GBP/USD | GBP/USD | — |
| 1.26; GBP/ | 1.19 | 1.28; GBP/ | |||
| EUR 1.15 | EUR 1.16 | ||||
Net amounts recognised within finance costs in profit and loss | — | (0.6) | — | — | — |
Balance on cash flow hedge reserve at 29 March 2025 | 11.6 | — | (8.1) | 6.0 | — |
Balance on cost of hedging reserve at 29 March 2025 | — | — | (9.6) | — | — |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 159
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 Financial instruments continued
Derivative financial instruments continued
| 28 March 2026 | |||||
Current | Non Current | ||||
| Forward foreign | Forward foreign | Forward foreign | |||
| exchange | exchange | Cross-currency | exchange | Interest | |
| contracts | contracts | swaps | contracts | rate swaps | |
| £m | £m | £m | £m | £m | |
Hedging risk strategy | Cash flow | FVTPL | Cash flow | Cash flow | Fair value |
| hedges | hedges | hedges | hedges | ||
Notional/currency legs | 1,744.3 | 131.4 | 252.9 | 270.1 | 300.0 |
Carrying amount assets | 14.1 | 0.7 | — | 3.5 | — |
Carrying amount (liabilities) | (19.0) | (0.1) | (15.2) | (0.5) | (8.4) |
Maturity date | to Sep 2026 | to Jul 2026 | to Dec 2037 | to Jun 2027 | to Aug 2032 |
Hedge ratio | 100% | N/A | 100% | 100% | 100% |
Description of hedged item | Highly | Inter- | USD fixed | Highly | GBP fixed |
| probable | company | rate | probable | rate | |
| transactional | loans/ | borrowing | transactional | borrowing | |
| FX exposures | deposits | FX exposures | |||
Change in fair value of hedging instrument | 28.3 | 1.1 | (4.5) | 9.0 | (8.4) |
Change in fair value of hedged item used to determine hedge effectiveness | (28.3) | 0.3 | 4.5 | (9.0) | 8.5 |
Weighted average hedge rate for the year | GBP/USD | — | GBP/USD | GBP/USD | — |
| 1.32; GBP/ | 1.19 | 1.35; GBP/ | |||
| EUR 1.13 | EUR 1.13 | ||||
Amounts recognised within finance costs in profit and loss | — | 1.4 | — | — | 0.1 |
Balance on cash flow hedge reserve at 28 March 2026 | (27.3) | — | (18.9) | 24.4 | — |
Balance on cost of hedging reserve at 28 March 2026 | — | — | — | — | — |
Marks and Spencer Group plc Annual Report and Financial Statements 2026160
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 Financial instruments continued
Derivative financial instruments continued
28 March 2026 | 29 March 2025 | ||||||||
Notional Value | Fair Value | Notional Value | Fair Value | ||||||
| Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | ||
| £m | £m | £m | £m | £m | £m | £m | £m | ||
| Current | |||||||||
Forward foreign exchange contracts | – cash flow hedges | 1,093.5 | 650.8 | 14.1 | (19.0) | 596.6 | 1,195.0 | 7.2 | (24.6) |
– FVTPL | 124.9 | 6.6 | 0.7 | (0.1) | 1.0 | 112.8 | — | (0.5) | |
1,218.4 | 657.4 | 14.8 | (19.1) | 597.6 | 1,307.8 | 7.2 | (25.1) | ||
| Non-current | |||||||||
Cross-currency swaps | – cash flow hedges | — | 252.9 | — | (15.2) | — | 252.9 | — | (10.5) |
Forward foreign exchange contracts | – cash flow hedges | 235.3 | 34.8 | 3.5 | (0.5) | 67.5 | 237.7 | 0.1 | (6.1) |
Interest rate swaps | – fair value hedges | — | 300.0 | — | (8.4) | — | — | — | — |
235.3 | 587.7 | 3.5 | (24.1) | 67.5 | 490.6 | 0.1 | (16.6) |
| Cost of | Hedge | Hedge | Hedge | |||||
| hedging | Deferred | Total cost of | reserve FX | reserve | reserve | Deferred | Total hedge | |
CCIRS 1 | tax | hedging | derivatives | CCIRS | gilt locks | tax | reserve | |
| £m | £m | £m | £m | £m | £m | £m | £m | |
Opening balance at 31 March 2024 | (7.4) | 2.0 | (5.4) | 5.4 | 6.1 | 0.1 | (3.2) | 8.4 |
Add: Change in fair value of hedging instrument recognised in OCI 2 | — | — | — | 29.9 | (8.5) | — | — | 21.4 |
Add: Costs of hedging deferred and recognised in OCI | (2.2) | — | (2.2) | — | — | — | — | — |
Less: Reclassified to the cost of inventory and property, plant and equipment | — | — | — | (17.7) | — | — | — | (17.7) |
Less: Reclassified from OCI to profit or loss | — | — | — | — | (5.7) | — | — | (5.7) |
Less: Deferred tax | — | 0.6 | 0.6 | — | — | — | 1.1 | 1.1 |
Closing balance at 29 March 2025 | (9.6) | 2.6 | ( 7.0) | 17.6 | (8.1) | 0.1 | (2.1) | 7.5 |
Opening balance at 30 March 2025 | (9.6) | 2.6 | (7.0) | 17.6 | (8.1) | 0.1 | (2.1) | 7.5 |
Add: Change in fair value of hedging instrument recognised in OCI | — | — | — | 37.5 | (4.5) | — | — | 33.0 |
Add: Costs of hedging deferred and recognised in OCI | 9.1 | — | 9.1 | — | — | — | — | — |
Less: Reclassified to the cost of inventory and property, plant and equipment | — | — | — | (58.0) | — | — | — | (58.0) |
Less: Reclassified from OCI to profit or loss | 0.5 | — | 0.5 | — | (6.3) | — | — | (6.3) |
Less: Deferred tax | — | (2.4) | (2.4) | — | — | — | 7.8 | 7.8 |
Closing balance at 28 March 2026 | — | 0.2 | 0.2 | (2.9) | (18.9) | 0.1 | 5.7 | (16.0) |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 161
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 Financial instruments continued
Derivative financial instruments continued
| 2026 | 2025 | |
| Movement in hedged items and hedging instruments | £m | £m |
Net (loss)/gain in fair value of cross-currency interest rate swap | (4.5) | 8.5 |
Net gain/(loss) on hedged items – cash flow hedges | 4.5 | (8.5) |
Net loss in fair value of interest rate swap | (8.4) | — |
Net gain on hedged items – fair value hedges | 8.5 | — |
Ineffectiveness | 0.1 | — |
| 20% | ||||
| 2% decrease in | 2% increase in | 20% weakening | strengthening | |
| interest rates | interest rates | in sterling | in sterling | |
| £m | £m | £m | £m | |
| At 29 March 2025 | ||||
| Impact on income | ||||
statement: (loss)/gain | (18.1) | 18.1 | — | — |
Impact on other comprehensive income: | ||||
(loss)/gain | 0.2 | (4.9) | 337.7 | (337.7) |
| At 28 March 2026 | ||||
| Impact on income | ||||
statement: (loss)/gain | (9.3) | 9.3 | — | — |
Impact on other comprehensive income: | ||||
(loss)/gain | 2.4 | (2.0) | 328.7 | (328.7) |
Marks and Spencer Group plc Annual Report and Financial Statements 2026162
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 Financial instruments continued
Offsetting of financial assets and liabilities continued
| Net financial | Related | ||||
| assets/ | amounts not | ||||
| Gross | Gross | (liabilities) | set off in the | ||
| financial | financial | per statement | statement of | ||
| assets/ | (liabilities)/ | of financial | financial | ||
| (liabilities) | assets set off | position | position | Net | |
| £m | £m | £m | £m | £m | |
| At 29 March 2025 | |||||
Trade and other receivables | 27.0 | (24.3) | 2.7 | — | 2.7 |
Derivative financial assets | 7.3 | — | 7.3 | (6.8) | 0.5 |
34.3 | (24.3) | 10.0 | (6.8) | 3.2 | |
Trade and other payables | (416.3) | 24.3 | (392.0) | — | (392.0) |
Derivative financial liabilities | (41.7) | — | (41.7) | 6.8 | (34.9) |
(458.0) | 24.3 | (433.7) | 6.8 | (426.9) |
| Net financial | Related | ||||
| assets/ | amounts not | ||||
| Gross | Gross | (liabilities) | set off in the | ||
| financial | financial | per statement | statement of | ||
| assets/ | (liabilities)/ | of financial | financial | ||
| (liabilities) | assets set off | position | position | Net | |
| £m | £m | £m | £m | £m | |
| At 28 March 2026 | |||||
Trade and other receivables | 38.8 | (32.0) | 6.8 | — | 6.8 |
Derivative financial assets | 18.3 | — | 18.3 | (15.8) | 2.5 |
57.1 | (32.0) | 25.1 | (15.8) | 9.3 | |
Trade and other payables | (462.3) | 32.0 | (430.3) | — | (430.3) |
Derivative financial liabilities | (43.2) | — | (43.2) | 15.8 | (27.4) |
(505.5) | 32.0 | (473.5) | 15.8 | (457.7) |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 163
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 Financial instruments continued
2026 | 2025 | |||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | |
| Assets measured at fair value | ||||||||
| Financial assets at fair value through profit or loss (FVTPL) | ||||||||
– derivatives held at FVTPL | — | 0.7 | — | 0.7 | — | — | — | — |
– other investments 1 | — | 39.0 | 16.1 | 55.1 | 274.5 | 21.7 | 14.6 | 310.8 |
Derivatives used for hedging | — | 17.6 | — | 17.6 | — | 7.3 | — | 7.3 |
| Liabilities measured at fair value | ||||||||
| Financial liabilities at fair value through profit or loss | ||||||||
– derivatives held at FVTPL | — | (0.1) | — | (0.1) | — | (0.5) | — | (0.5) |
– Gist contingent consideration 2 | — | — | — | — | — | — | (25.6) | (25.6) |
Derivatives used for hedging | — | (43.1) | — | (43.1) | — | (41.2) | — | (41.2) |
Marks and Spencer Group plc Annual Report and Financial Statements 2026164
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 Financial instruments continued
Fair value hierarchy continued
| 2026 | 2025 | |
| £m | £m | |
Opening balance | 3,538.1 | 4,034.6 |
Fair value gain/(loss) recognised in other comprehensive income | 183.9 | 53.8 |
Other movements recognised in profit or loss | — | (48.5) |
Cash withdrawals | (379.4) | (501.8) |
Closing balance | 3,342.6 | 3,538.1 |
| Property | Restructuring | Other | Total | |
| £m | £m | £m | £m | |
At 31 March 2024 | 110.0 | 30.5 | 11.2 | 151.7 |
Provided in the year – charged to profit or loss | 22.0 | 16.8 | 8.4 | 47. 2 |
Provided in the year – charged to property, plant & equipment | 46.1 | — | — | 46.1 |
Released in the year | (38.6) | (13.3) | (5.5) | (57.4) |
Utilised during the year | (6.5) | (14.6) | (1.6) | (22.7) |
Discount rate unwind | 6.4 | — | — | 6.4 |
At 29 March 2025 | 139.4 | 19.4 | 12.5 | 171.3 |
| Analysed as: | ||||
Current | 25.1 | |||
Non-current | 146.2 |
| Property | Restructuring | Other | Total | |
| £m | £m | £m | £m | |
At 30 March 2025 | 139.4 | 19.4 | 12.5 | 171.3 |
| Acquired through business | ||||
combinations | 20.7 | — | 13.0 | 33.7 |
Provided in the year – charged to profit or loss | 43.4 | 5.8 | 15.7 | 64.9 |
Provided in the year – charged to property, plant & equipment | 19.8 | — | — | 19.8 |
Released in the year | (39.0) | (13.0) | (8.9) | (60.9) |
Utilised during the year | (6.2) | (8.9) | (5.5) | (20.6) |
Discount rate unwind | 9.2 | — | — | 9.2 |
Transfer | — | — | (7.6) | (7.6) |
At 28 March 2026 | 187.3 | 3.3 | 19.2 | 209.8 |
| Analysed as: | ||||
Current | 42.1 | |||
Non-current | 167.7 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 165
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
22 Provisions continued
| Land and | Capital | Other | ||||||||
| buildings | allowances in | Pension | short-term | |||||||
| temporary | excess of | temporary | IFRS 16 | Intangible | temporary | Total UK | Overseas | |||
| differences | depreciation | differences | adjustment | fixed assets | Losses | differences | deferred tax | deferred tax | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
At 31 March 2024 (Restated) | (228.7) | (80.1) | (39.7) | (14.8) | — | — | 44.0 | (319.3) | 5.7 | (313.6) |
(Charged)/credited to income statement | 5.5 | (63.8) | 0.3 | (7.1) | — | — | 5.2 | (59.9) | 2.9 | (57.0) |
(Charged)/credited to equity/other comprehensive income | — | — | 70.2 | — | — | — | (4.1) | 66.1 | (0.5) | 65.6 |
At 29 March 2025 (Restated) | (223.2) | (143.9) | 30.8 | (21.9) | — | — | 45.1 | (313.1) | 8.1 | (305.0) |
Credited/(charged) to income statement | 14.8 | (93.9) | 0.1 | (3.6) | 2.7 | (1.6) | (6.9) | (88.4) | 0.9 | (87.5) |
Credited/(charged) to equity/other comprehensive income | — | — | (2.2) | — | — | — | (16.8) | (19.0) | (1.7) | (20.7) |
| Movement arising from the acquisition | ||||||||||
of business combinations | — | (38.3) | — | (12.2) | (69.8) | 72.0 | 2.3 | (46.0) | — | (46.0) |
At 28 March 2026 | (208.4) | (276.1) | 28.7 | (37.7) | (67.1) | 70.4 | 23.7 | (466.5) | 7.3 | (459.2) |
Marks and Spencer Group plc Annual Report and Financial Statements 2026166
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23 Deferred tax continued
Deferred tax assets/(liabilities) continued
| 2025 | 2024 | ||
| 2026 | (Restated) | (Restated) | |
| £m | £m | £m | |
Deferred tax assets | 13.3 | 13.9 | 11.7 |
Deferred tax liabilities | (472.5) | (318.9) | (325.3) |
2026 | 2025 | |||
| Ordinary shares | Ordinary shares | |||
| of £0.01 each | of £0.01 each | |||
Shares | £m | Shares | £m | |
| Issued and fully paid | ||||
At start of year | 2,055,200,170 | 20.6 | 2,040,355,823 | 20.5 |
Shares issued in respect of employee | ||||
share option schemes | 10,308,429 | 0.1 | 14,844,347 | 0.1 |
At end of year | 2,065,508,599 | 20.7 | 2,055,200,170 | 20.6 |
25 Contingencies and commitments
| 2026 | 2025 | |
| £m | £m | |
| Commitments in respect of properties in the course | ||
of construction | 495.7 | 359.7 |
Software capital commitments | 17.5 | 9.2 |
513.2 | 368.9 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 167
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
26 Analysis of cash flows given in the statement of cash flows
Cash flows from operating activities
| 2026 | 2025 | |
| £m | £m | |
Profit on ordinary activities after taxation | 236.2 | 291.9 |
Income tax expense | 128.4 | 219.9 |
Finance costs | 217.1 | 177.2 |
Finance income | (45.0) | (64.7) |
Operating profit | 536.7 | 624.3 |
Share of results of Ocado Retail Limited | — | 28.7 |
Share of results in other joint ventures | (0.4) | (0.5) |
Increase in inventories | (79.3) | (73.3) |
Decrease/(Increase) in receivables | 39.0 | (33.7) |
(Decrease)/Increase in payables | (113.6) | 68.4 |
Depreciation, amortisation, impairments and disposals | 650.7 | 542.6 |
Non-cash share-based payment expense | 38.8 | 52.4 |
Non-cash pension expense | 5.5 | 5.6 |
Defined benefit pension funding | (45.3) | (0.4) |
Adjusting items net cash outflows 1,2 | (130.7) | (25.6) |
Adjusting items M&S Bank 3 | — | (27.4) |
Adjusting items within operating profit | 281.7 | 360.2 |
Cash generated from operations | 1,183.1 | 1,521.3 |
1 Excludes £23.5m (last year: £19.0m) of surrender payments included within repayment of lease liabilities in the consolidated statement of cash flows relating to leases within the store estate programme.
2 Adjusting items net cash outflows relate to costs associated with the cyber incident, to strategic programme costs associated with the Store estate, Digital and Technology transformation, and UK logistics.
3 Last year end adjusting items M&S Bank relates to one-off fees paid to M&S Bank under the new Relationship Agreement which will be recognised as a reduction to income over the term of the contract.
Marks and Spencer Group plc Annual Report and Financial Statements 2026168
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
| Acquired | Lease | Exchange | At | |||||
| At | Cash flows | Cash flows | Changes | through | additions and | and other | 29 March | |
| 31 March | excluding | relating to | in fair | business | remeasure- | non-cash | 2025 | |
| 2024 | interest | interest | values | combination | ments | movements | (Restated) 1 | |
| £m | £m | £m | £m | £m | £m | £m | £m | |
| Net debt | ||||||||
Cash and cash equivalents (see note 18) | 1,022.4 | (50.2) | (106.5) | — | — | — | (1.2) | 864.5 |
Net cash per statement of cash flows | 1,022.4 | (50.2) | (106.5) | — | — | — | (1.2) | 864.5 |
Other financial assets (see note 16) | 12.3 | 287.0 | — | — | — | — | — | 299.3 |
| Liabilities from financing activities | ||||||||
Medium-Term Notes (see note 20) | (921.7) | 187.8 | 45.6 | — | — | — | (28.8) | (717.1) |
Lease liabilities (see note 20) | (2,211.5) | 258.6 | 103.4 | — | — | (261.0) | (116.9) | (2,227.4) |
Partnership liability to the Marks & Spencer UK Pension Scheme (see note 12) | (81.9) | 40.0 | 0.5 | — | — | — | 41.4 | — |
Derivatives held to hedge Medium-Term Notes | (21.6) | — | — | 11.1 | — | — | — | (10.5) |
Liabilities from financing activities | (3,236.7) | 486.4 | 149.5 | 11.1 | — | (261.0) | (104.3) | (2,955.0) |
Less: Cash flows related to interest and derivative instruments | 36.2 | — | (43.0) | (11.1) | — | — | 29.3 | 11.4 |
Net debt | (2,165.8) | 723.2 | — | — | — | (261.0) | (76.2) | (1,779.8) |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 169
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
27 Analysis of net debt continued
A. Reconciliation of movement in net debt continued
| At | Acquired | Lease | Exchange | |||||
| 30 March | Cash flows | Cash flows | Changes | through | additions and | and other | At | |
| 2025 | excluding | relating to | in fair | business | remeasure- | non-cash | 28 March | |
| (Restated) | interest | interest 1 | values | combination | ments | movements | 2026 | |
| £m | £m | £m | £m | £m | £m | £m | £m | |
| Net debt | ||||||||
Cash and cash equivalents (see note 18) | 864.5 | 214.8 | (147.8) | — | 68.2 | — | (2.5) | 997.2 |
Net cash per statement of cash flows | 864.5 | 214.8 | (147.8) | — | 68.2 | — | (2.5) | 997.2 |
Other financial assets (see note 16) 1 | 299.3 | (260.3) | — | — | — | — | — | 39.0 |
| Liabilities from financing activities | ||||||||
Medium-Term Notes (see note 20) | ( 717.1) | 108.0 | 45.7 | — | — | — | (16.0) | (579.4) |
Other loans (see note 20) | — | — | — | — | (90.0) | — | — | (90.0) |
Lease liabilities (see note 20) | (2,227.4) | 317.5 | 136.0 | — | (333.8) | (489.3) | (153.0) | (2,750.0) |
Derivatives held to hedge Medium-Term Notes | (10.5) | — | — | 4.5 | — | — | (9.2) | (15.2) |
Liabilities from financing activities | (2,955.0) | 425.5 | 181.7 | 4.5 | (423.8) | (489.3) | (178.2) | (3,434.6) |
Less: Cash flows related to interest and derivative instruments | 11.4 | — | (33.9) | (4.5) | — | — | 13.6 | (13.4) |
Net debt | (1,779.8) | 380.0 | — | — | (355.6) | (489.3) | (167.1) | (2,411.8) |
| 2025 | ||
| 2026 | (Restated) 1 | |
| £m | £m | |
| Statement of financial position and related notes | ||
Cash and cash equivalents (see note 18) | 997.2 | 864.5 |
Other financial assets (see note 16) | 39.0 | 299.3 |
Medium-Term Notes – excluding impact of foreign exchange (see note 20) | (616.2) | (738.3) |
Lease liabilities (see note 20) | (2,750.0) | (2,227.4) |
Other loans | (90.0) | — |
(2,420.0) | (1,801.9) | |
Interest payable included within related borrowing and the Partnership liability to the Marks & Spencer UK Pension Scheme | 8.2 | 22.1 |
Net debt | (2,411.8) | (1,779.8) |
Marks and Spencer Group plc Annual Report and Financial Statements 2026170
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
| 2026 | 2025 | |
| £m | £m | |
Opening balance | — | — |
Loan acquired on consolidation of Ocado Retail Limited | 100.9 | — |
Interest charged | 7.6 | — |
Closing balance | 108.5 | — |
| 2026 | 2025 | |
| £m | £m | |
Management fees | 203.3 | — |
| 2026 | 2025 | |
| £m | £m | |
Opening balance | — | 92.2 |
Interest charged | — | 8.5 |
Closing balance | — | 100.7 |
| 2026 | 2025 | |
| £m | £m | |
Sales of goods and services | — | 62.2 |
Marks and Spencer Group plc Annual Report and Financial Statements 2026 171
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
29 Business combination
On 6 April 2025, in line with expectations, the Group obtained control of Ocado Retail
Limited. There was no change in economic interest of both shareholders in Ocado
Retail Limited, nor any consideration paid by the Group, as a result of this change.
The Group has gained control of an investment previously accounted for as an
associate, which has been accounted for as a business combination using the
acquisition method of accounting, at the ‘consolidation date’, in accordance with
IFRS 3: Business Combinations and consequently the Ocado Retail Limited assets
acquired, and liabilities assumed, have been recorded by the Group at fair value.
| As at | |
| 6 April 2025 | |
| £m | |
| Fair value of identifiable net assets | |
Intangible assets: brand | 228.7 |
Intangible assets: customer relationships | 50.4 |
Intangible assets: other | 12.9 |
Property, plant and equipment – owned | 234.8 |
Property, plant and equipment – right-of-use assets 1 | 333.0 |
Inventories | 85.7 |
Trade and other receivables 2 | 116.7 |
Cash and cash equivalents | 68.2 |
Trade and other payables | (261.6) |
Borrowings and other financial liabilities 1 | (422.8) |
Provisions | (33.8) |
Deferred tax liabilities | (46.0) |
| 366.2 | |
| Goodwill | |
Fair value of pre-existing interest in Ocado Retail Limited | 385.0 |
Fair value of identifiable net assets | (366.2) |
Non-controlling interest, based on their proportionate share of the acquired net assets | 177.3 |
Loss on settlement of pre-existing relationship | (17.7) |
Settlement of pre-existing relationship | 106.1 |
| 284.5 |
1 The Group measured the acquired lease liabilities using the present value of the remaining lease
payments at the date of acquisition. The right-of-use assets were measured at an amount equal to
the lease liabilities and adjusted to reflect the favourable or unfavourable terms of the lease
relative to market terms.
2 The fair value of trade and other receivables is considered equivalent to the gross contractual
amount and the Group expects to collect substantially all of these.
Net cash inflow arising on acquisition relates to cash and cash equivalents acquired.
The goodwill primarily reflects the value of future new customers. None of the
goodwill is expected to be deductible for tax purposes.
See note 2 for the contribution Ocado Retail Limited has made to the Group since the
acquisition date. If the acquisition had occurred on 30 March 2025, Group revenue
and profit would not be materially different.
Settlement of pre-existing relationships
At the consolidation date, the Group and Ocado Retail Limited had two pre-existing
relationships: a long-term supply contract under which the Group supplied Ocado
Retail Limited with certain products at agreed contract rates; and a shareholder loan
provided by the Group to Ocado Retail Limited (see note 28).
These pre-existing relationships were effectively settled at the consolidation date
and were accounted for separately from the business combination under IFRS 3.
Any pre-existing balances were eliminated on consolidation, with the balances
derecognised from the Group’s balance sheet and excluded from the fair value of
Ocado Retail Limited’s net assets acquired.
The long-term supply contract was effectively terminated at the consolidation date.
The Group has attributed £17.7m of the notional consideration to the settlement of
that pre-existing relationship. The fair value of the settlement has been determined
based on an assessment of the difference between current market rates and the
rates previously agreed in the lower cost legacy supply contract. The charge has been
recognised within adjusting items (see note 5).
30 Contingent assets
As at 28 March 2026, the Company has no contingent assets. Previously, the Group
was seeking damages from an independent third party following their involvement in
anti-competitive behaviour that adversely impacted the Group. The Group expected to
receive an amount from the claim (either in settlement or from the legal proceedings),
a position that was reinforced by court judgements in similar claims. Last year, net
income of £20.5m was recognised in settlement of the damages action (see note 5).
Marks and Spencer Group plc Annual Report and Financial Statements 2026172
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
32 Subsequent events
Subsequent to the balance sheet date, the Group has monitored trade performance,
internal actions, as well as other relevant external factors (such as changes in any of
the Government restrictions). No material changes in key estimates and judgements
have been identified as adjusting post balance sheet events. There have been no
material non-adjusting events since 28 March 2026.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 173
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
COMPANY STATEMENT OF FINANCIAL POSITION
Notes
As at
28 March
2026
£m
As at
29 March
2025
£m
Assets
Non-current assets
Investments in subsidiary undertakings C6 9,870.6 9,830.7
Total assets 9,870.6 9,830.7
Liabilities
Current liabilities
Amounts owed to subsidiary undertakings 2,447.9 2,462.7
Total liabilities 2,447.9 2,462.7
Net assets 7,422.7 7,368.0
Equity
Ordinary share capital C7 20.7 20.6
Share premium account C7 994.6 982.7
Capital redemption reserve 2,680.4 2,680.4
Merger reserve C7 1,397.3 1,397.3
Retained earnings 2,329.7 2,287.0
Total equity 7,422.7 7,368.0
The Company’s profit for the year was £79.8m (last year: loss of £151.3m).
The financial statements were approved by the Board and authorised for issue on 19 May 2026. The financial statements also comprise the notes C1 to C7.
Stuart Machin Alison Dolan
Chief Executive Officer Chief Financial Officer
Registered number: 04256886
Marks and Spencer Group plc
Marks and Spencer Group plc Annual Report and Financial Statements 2026174
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
Ordinary
share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Merger
reserve
£m
Retained
earnings
£m
Total
£m
At 31 March 2024 20.5 967.0 2,680.4 1,397.3 2,455.8 7,521.0
Loss for the year — — — — (151.3) (151.3)
Dividends — — — — (60.5) (60.5)
Capital contribution for share-based payments — — — — 43.0 43.0
Shares issued on exercise of employee share options 0.1 15.7 — — — 15.8
At 29 March 2025 20.6 982.7 2,680.4 1, 397.3 2, 287.0 7,368.0
At 30 March 2025 20.6 982.7 2,680.4 1,397.3 2,287.0 7,368.0
Profit for the year — — — — 79.8 79.8
Dividends — — — — (77.0) (77.0)
Capital contribution for share-based payments — — — — 39.9 39.9
Shares issued on exercise of employee share options 0.1 11.9 — — — 12.0
At 28 March 2026 20.7 994.6 2,680.4 1,397.3 2,329.7 7,422.7
COMPANY STATEMENT OF CASH FLOWS
52 weeks
ended
28 March
2026
£m
52 weeks
ended
29 March
2025
£m
Cash flow from investing activities
Dividends received 79.8 65.6
Net cash generated from investing activities 79.8 65.6
Cash flows from financing activities
Shares issued on exercise of employee share options 12.0 15.8
Repayment of intercompany loan (14.8) (20.9)
Equity dividends paid (77.0) (60.5)
Net cash used in financing activities (79.8) (65.6)
Net cash inflow from activities — —
Cash and cash equivalents at beginning and end of year — —
Marks and Spencer Group plc Annual Report and Financial Statements 2026 175
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C1 Accounting policies
General information
Marks and Spencer Group plc (the Company) is a public limited company domiciled
and incorporated in England and Wales under the Companies Act 2006. The address
of the Company’s registered office is Waterside House, 35 North Wharf Road, London
W2 1NW, United Kingdom.
The principal activities of the Company and the nature of the Company’s operations
is as a holding entity.
These financial statements are presented in sterling, which is the Company’s
functional currency, and are rounded to the nearest hundred thousand.
The Company’s accounting policies are the same as those set out in note 1 of the
Group financial statements, except as noted below.
Investments in subsidiaries are stated at cost less provisions for impairment, where
appropriate. The Company grants share-based payments to the employees of
subsidiary companies. Each period, the fair value of the employee services received
by the subsidiary as a capital contribution from the Company is reflected as an
addition to investments in subsidiaries.
Loans from other Group undertakings and all other payables are initially recorded at
fair value, which is generally the proceeds received. They are then subsequently carried
at amortised cost. The loans are non-interest bearing and repayable on demand.
In accordance with the exemption allowed by Section 408(3) of the Companies Act
2006, the Company has not presented its own income statement or statement of
comprehensive income.
Key sources of estimation uncertainty
Impairment of investments in subsidiary undertakings
The carrying value of the investment in subsidiary undertakings is reviewed for
impairment or impairment reversal on an annual basis. The recoverable amount is
determined based on value in use which requires the determination of appropriate
assumptions (which are sources of estimation uncertainty) in relation to the cash
flows over the three-year strategic plan period, the long-term growth rate to be
applied beyond this three-year period and the risk-adjusted pre-tax discount rate
used to discount the assumed cash flows to present value.
Estimation uncertainty arises due to changing economic and market factors, the
channel shift from stores to online, increasing technological advancement and the
Group’s ongoing strategic transformation programmes. See note C6 for further
details on the assumptions and associated sensitivities.
The Company’s financial risk is managed as part of the Group’s strategy and policies
as discussed in note 21 of the Group financial statements.
C2 Employees
The Company had no employees during the current or prior year. Directors received
emoluments in respect of their services to the Company during the year of £1,353,063
(last year: £1,341,240). The Company did not operate any pension schemes during the
current or preceding year. For further information see the Remuneration Report.
C3 Auditor’s remuneration
Auditor’s remuneration in respect of the Company’s annual audit has been borne by
its subsidiary Marks and Spencer plc and has been disclosed on a consolidated basis
in the Company’s consolidated financial statements as required by Section 494(4)(a)
of the Companies Act 2006.
C4 Dividends
2026
per share
2025
per share
2026
£m
2025
£m
Dividends on equity ordinary shares
Paid final dividend 2.6p 2.0p 52.4 40.2
Paid interim dividend 1.2p 1.0p 24.6 20.3
3.8p 3.0p 77.0 60.5
The directors have approved a final dividend of 3.0p per share (last year: 2.6p per
share), which, in line with the requirements of IAS 10 Events after the Reporting Period,
has not been recognised within these results. This final dividend of c.£62.0m (last
year: £52.4m) will be paid on 10 July 2026 to shareholders whose names are on the
Register of Members at the close of business on 5 June 2026. The ordinary shares will
be quoted ex dividend on 4 June 2026.
A dividend reinvestment plan (DRIP) is available to shareholders who would prefer to
invest their dividends in the shares of the Company. For those shareholders electing
to receive the DRIP, the last date for receipt of a new election is 19 June 2026.
C5 Related party transactions
During the year, the Company received a dividend of £79.8m (last year: £65.6m) and
decreased its loan from Marks and Spencer plc by £14.8m (last year: £20.9m). The
outstanding balance was £2,447.9m (last year: £2,462.7m) and is non-interest bearing.
There were no other related party transactions.
Marks and Spencer Group plc Annual Report and Financial Statements 2026176
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C6 Investments
A. Investments in subsidiary undertakings
2026 2025
£m £m
Beginning of the year 9,830.7 10,004.6
Contributions to subsidiary undertakings relating to
share-based payments 39.9 43.0
Impairment charge — (216.9)
End of year 9,870.6 9,830.7
Shares in subsidiary undertakings represent the Company’s investment in Marks and
Spencer plc, Marks and Spencer Holdings Limited and Marks and Spencer (A2B) Limited.
Impairment of investments in subsidiary undertakings
Investment in Marks and Spencer plc
The Company evaluates its investments in subsidiary undertakings annually for any
indicators of impairment or impairment reversal. The Company considers the relationship
between its market capitalisation and the carrying value of its investments, among
other factors, when reviewing for indicators of impairment. As at 28 March 2026, the
market capitalisation of the Group was below the carrying value of its investment in
Marks and Spencer plc of £9,478.4m, indicating a potential impairment, despite
strong Group performance.
The recoverable amount of the investment in Marks and Spencer plc has been
determined based on a value in use calculation. The Company has updated its
assumptions as at 28 March 2026, reflecting the latest budget and forecast cash
flows covering a three-year period. The pre-tax discount rate of 12.1% (last year: 13.5%)
was derived from the Group’s weighted average cost of capital, the inputs of which
include a country risk-free rate, equity risk premium, Group size premium and a risk
adjustment (beta). The long-term growth rate of 2.0% (last year: 2.0%), was based on
inflation forecasts by recognised bodies with reference to rates used within the
retailindustry.
The outcome of the value in use calculation supports the carrying value of the
investment in subsidiary undertakings, with a headroom of £5,213.3m. The Company
has determined that the recoverable amount of its investment in Marks and Spencer plc
is £12,241.7m and as a result no impairment has been recognised.
Sensitivity analysis
As disclosed in the accounting policies note C1, the cash flows used within the value in
use model, the long-term growth rate and the discount rate are sources of estimation
uncertainty. Management has performed a sensitivity analysis on the key assumptions
and using reasonably possible changes would result in the following impacts:
Sensitivity area Sensitivity tested Headroom Reduction in headroom
Cash flows 10% reduction £3,806.8m £1,406.5m
Long-term growth rate 50 basis point decrease £4,651.1m £562.2m
Discount rate 250 basis point increase £2,498.8m £2,714.5m
In the event that all three were to happen simultaneously, the resulting headroom
would be £1,048.2m.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 177
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C6 Investments continued
A. Investments in subsidiary undertakings continued
Investment in Marks and Spencer Holdings Limited
Marks and Spencer Holdings Limited holds the investment in Ocado Retail Limited.
Inthe prior year, the impairment of Ocado Retail Limited recognised in the Group
financial statements (see note 5) was considered to be an indicator of impairment for
the Company’s investment in Marks and Spencer Holdings Limited.
Accordingly, in the prior year the recoverable amount of the investment in Marks and
Spencer Holdings Limited was assessed based on the fair value of the subsidiary,
determined with reference to its net asset value and adjusted to reflect the impairment
recognised in respect of its investment in Ocado Retail Limited. The recoverable
amount was determined to be £389.4m and, as a result, an impairment of £216.9m
was recognised in the prior year.
In the current year, no indicators of impairment have been identified in respect of the
investment in Marksand Spencer Holdings Limited and, accordingly, no further
impairment has been recognised.
B. Related undertakings
In accordance with Section 409 of the Companies Act 2006, a full list of related
undertakings, the country of incorporation and the effective percentage of equity
owned, as at 28 March 2026 is disclosed below. All undertakings are indirectly owned
by the Company unless otherwise stated and are consolidated within the financial
statements of the Group.
Subsidiary and other related undertakings registered in the UK
(i)
Name Share class
Proportion of
shares held
(%)
Founders Factory Retail Limited
Registered office: Founders Factory
(Level 7) Arundel Street Building,
180Strand, 2 Arundel Street, London
WC2R 3DA
£0.0001 ordinary
(25.001% of total capital)
0.004
£0.0001 preferred
(74.999% of total capital)
100
Hedge End Park Limited
Registered office: 33 Charterhouse
Street, London EC1M 6HA
£1 ordinary A
(50% of total capital)
—
£1 ordinary B
(50% of total capital)
100
Marks and Spencer Pension Trust
Limited
(ii)(iii)
£1 ordinary A 100
£1 ordinary B —
£1 ordinary C —
Name Share class
Proportion of
shares held
(%)
Marks and Spencer plc
(iii)
£0.25 ordinary 100
Marks and Spencer Scottish Limited
Partnership
(iv)
Registered office: 75-85 High Street,
Perth PH1 5TJ
Partnership interest 100
Ocado Retail Limited
Registered office: Apollo Court 2Bishop
Square, Hatfield Business Park, Hatfield,
Hertfordshire AL10 9NE
£0.01 ordinary 50
Amethyst Leasing (Holdings) Limited
(v)
£1 ordinary 100
M & S Limited
(v)
£1 ordinary 100
Marks and Spencer Pearl (1) Limited
(v)
£1 ordinary 100
Manford (Textiles) Limited
(v)
£1 ordinary 100
Marks and Sparks Limited
(v)
£1 ordinary 100
Marks and Spencer (Northern Ireland)
Limited
(v)
Registered office: Merchant Square,
20-22 Wellington Place, Belfast BT16GE
£1 ordinary 100
Marks and Spencer Property
Developments Limited
£1 ordinary 100
Nobody’s Child Limited
Registered office: Ground Floor, 10-14
White Lion Street, London N1 9PD
£0.01 ordinary
(65.987% of total capital)
—
£0.01 Preference
(34.013% of total capital)
100
St. Michael (Textiles) Limited
(v)
£1 ordinary 100
Marks & Spencer Outlet Limited
(v)
£1 ordinary 100
Marks and Spencer Group plc Annual Report and Financial Statements 2026178
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C6 Investments continued
B. Related undertakings continued
UK registered subsidiaries exempt from audit
The following UK subsidiaries will take advantage of the audit exemption set out
within Section 479A of the Companies Act 2006 for the year ended 28 March 2026.
Unless otherwise stated, the undertakings listed below are registered at Waterside
House, 35 North Wharf Road, London, W2 1NW, United Kingdom, and have a single
class of ordinary share with a nominal value of £1. All undertakings are indirectly
owned by the Company unless otherwise stated.
Name
Proportion of
shares held
(%)
Company
Number
Amethyst Leasing (Properties) Limited 100 4246934
Busyexport Limited 100 4411320
Marks and Spencer (Initial LP) Limited
(iii)
Registered office: 2 Semple Street, Edinburgh EH3 8BL
100 SC315365
Marks and Spencer (Property Ventures) Limited 100 5502513
Marks and Spencer 2005 (Brooklands Store) Limited 100 5502608
Marks and Spencer 2005 (Chester Store) Limited 100 5502542
Marks and Spencer 2005 (Fife Road Kingston Store)
Limited
100 5502598
Marks and Spencer 2005 (Glasgow Sauchiehall Store)
Limited
100 5502546
Marks and Spencer 2005 (Hedge End Store) Limited 100 5502538
Marks and Spencer 2005 (Kensington Store) Limited 100 5502478
Marks and Spencer 2005 (Kingston-on-Thames Satellite
Store) Limited
100 5502523
Marks and Spencer 2005 (Kingston-on-Thames Store)
Limited
100 5502520
Marks & Spencer Simply Foods Limited 100 4739922
Marks and Spencer (Property Investments) Limited 100 5502582
Marks and Spencer Chester Limited 100 5174129
Marks and Spencer France Limited 100 5502548
Marks and Spencer International Holdings Limited 100 2615081
Marks and Spencer (Investment Holdings) Limited 100 13587353
Marks and Spencer (A2B) Limited
(iii)
100 14228803
Name
Proportion of
shares held
(%)
Company
Number
Marks & Spencer Company Archive CIC
(vi)
N/A 7377510
Marks and Spencer 2005 (Parman House Kingston Store)
Limited
100 5502588
Marks and Spencer 2005 (Pudsey Store) Limited 100 5502544
Marks and Spencer 2005 (Warrington Gemini Store)
Limited
100 5502502
Marks and Spencer Holdings Limited
(iii)
100 11845975
Marks and Spencer Investments 100 4903061
Marks and Spencer Property Holdings Limited 100 2100781
Ruby Properties (Cumbernauld) Limited 100 4922798
Ruby Properties (Thorncliffe) Limited 100 4716110
Ruby Properties (Tunbridge) Limited 100 4716032
Simply Food (Property Investments) 100 5502543
Simply Food (Property Ventures) Limited 100 2239799
Marks and Spencer (Bradford) Limited 100 10011863
Marks and Spencer (Jaeger) Limited 100 13098074
Marks and Spencer Pearl (Daventry) Limited 100 14267865
Gist Limited 100 502669
St. Michael Finance Limited 100 1339700
The Sports Edit Limited
(vii)
100 9331295
The Company will guarantee the debts and liabilities of the above UK subsidiary
undertakings at the balance sheet date of £123.8m in accordance with Section 479C
of the Companies Act 2006. The Company has assessed the probability of loss under
the guarantee as remote.
(i) All companies registered at Waterside House, 35 North Wharf Road, London, W2 1NW,
UnitedKingdom, unless otherwise stated.
(ii) In accordance with the Articles of Association of Marks and Spencer Pension Trust Limited,
theholders of B and C ordinary shares are both directors of that company.
(iii) Interest held directly by Marks and Spencer Group plc.
(iv) Marks and Spencer (Initial LP) Limited and Marks and Spencer Pension Trust Limited are the limited
partners; Marks and Spencer plc is the General Partner.
(v) Dormant entities.
(vi) No share capital, as the company is limited by guarantee. Marks and Spencer plc is the sole member.
(vii) Share capital made up of £0.01 ordinary shares.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 179
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
C6 Investments continued
B. Related undertakings continued
International subsidiary undertakings
(i)
Name Registered address Country Share class
Proportion
of shares
held by
subsidiary
(%)
Marks and Spencer
(Australia) Pty
Limited
(ii)
Minter Ellison,
Governor Macquarie
Tower, Level 40,
1 Farrer Place,
Sydney NSW 2000,
Australia
Australia
AUD 2
ordinary
100
Marks and Spencer
(Shanghai) Limited
Unit 03-05A 16/F,
EcoCity 1788,
1788 West Nan Jing
Road, Shanghai, China
China USD NPV 100
Marks and Spencer
Czech Republic a.s.
Václavské námˇestí
793/36
Nové Mˇesto, 110 00
Prague 1, Czech
Republic
Czech
Republic
CZK 1,000
ordinary
CZK 100,000
ordinary
CZK 1,000,000
ordinary
100
100
100
Marks and Spencer
Services S.R.O.
Václavské námˇestí
793/36
Nové Mˇesto, 110 00
Prague 1, Czech
Republic
Czech
Republic
CZK NPV 100
Marks and Spencer
Greece Single
Member SA
(iii)
33-35 Ermou Street,
Athens 10563, Greece
Greece
€3 ordinary
€3 preference
100
100
Ignazia Limited
Heritage Hall,
LeMarchant Street,
StPeter Port GY14JH,
Guernsey
Guernsey £1 ordinary 100
Teranis Limited
Heritage Hall,
LeMarchant Street,
StPeter Port GY14JH,
Guernsey
Guernsey £1 ordinary 100
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
Name Registered address Country Share class
Proportion
of shares
held by
subsidiary
(%)
M.S. General
Insurance L.P.
Heritage Hall,
LeMarchant Street,
StPeter Port GY14JH,
Guernsey
Guernsey
Partnership
interest
100
Marks and Spencer
(Hong Kong)
Investments Limited
Suites 807-13, 8/F,
South Tower, World
Finance Centre,
Harbour City,
Kowloon, Hong Kong
Hong Kong
No Par Value
ordinary
100
Marks and Spencer
(India) pvt Limited
Plot No 64, 2nd Floor,
Holly Hocks, Sector
44, Gurgaon – 122 002,
Haryana, India
India
INR 10
ordinary
100
Marks and Spencer
Reliance India pvt Ltd
4th Floor, Court
House, Lokmanya
Tilak Marg, Dhobi
Talao, Mumbai,
400002, India
India
INR 10 Class A
(14.619% of
total capital)
INR 10 Class B
(43.544% of
total capital)
INR 5 Class C
(iv)
(41.837% of
total capital)
51
100
—
Marks and Spencer
(Ireland) Limited
24/27 Mary Street,
Co.Dublin, Dublin 1
D01 YE83, Ireland
Ireland €1.25 ordinary 100
Marks and Spencer
Pensions Trust
(Ireland) Company
Limited By Guarantee
24/27 Mary St., Dublin
1, Dublin D01YE83,
Ireland
Ireland N/A
(v)
—
Marks and Spencer
(Nederland) B.V.
Basisweg 10,
1043 AP,
Amsterdam,
Netherlands
Netherlands €450 ordinary 100
Marks and Spencer
B.V.
Basisweg 10,
1043 AP,
Amsterdam,
Netherlands
Netherlands €100 ordinary 100
Marks and Spencer Group plc Annual Report and Financial Statements 2026180
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Name Registered address Country Share class
Proportion
of shares
held by
subsidiary
(%)
Marks & Spencer
(Portugal) Lda.
Avenida da Liberdade
249, 8º, 1250-143,
Lisbon, Portugal
Portugal €1 ordinary 100
Marks and Spencer
(Singapore)
Investments Pte. Ltd.
77 Robinson Road,
#13-00 Robinson 77,
Singapore 068896,
Singapore
Singapore SGD NPV 100
Marks and Spencer
(SA) (Pty) Limited
(ii)
Woolworths House,
93Longmarket Street,
Cape Town 8001,
South Africa
South Africa
ZAR 2
ordinary
100
Marks and Spencer
Clothing Textile
Trading J.S.C.
Havalani Karsisi
Istanbul Dunya Ticaret
Merkezi
A3 Blok, Kat:11
Yesilkoy, Bakirkoy,
Istanbul
Turkey
Turkey
TRL 25.00
ordinary
100
Gist Distribution
Limited
24-27 Mary Street,
Dublin 1, Dublin,
Ireland
Ireland €1 ordinary 100
NOTE: A number of the companies listed are legacy companies which no longer serve any
operationalpurpose.
(i) The shares of all international subsidiary undertakings are held by companies within the Group
other than the Company (Marks and Spencer Group plc).
(ii) Dormant entities.
(iii) On 31 March 2025, Marks and Spencer Marinopoulos Greece SA changed name to Marks and Spencer
Greece Single Member SA.
(iv) INR 5 class C shares 100% owned by JV partner.
(v) No share capital as the company is limited by guarantee.
C6 Investments continued
B. Related undertakings continued
International subsidiary undertakings
(i)
continued
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C7 Share capital and other reserves
Issue of new shares
A total of 10,308,429 (last year: 14,844,347) ordinary shares having a nominal value
of£0.1m (last year: £0.1m) were allotted during the year under the terms of the
Company’s share schemes which are described in note 13 of the Group financial
statements. Theaggregate consideration received was £12.0m (last year: £15.8m).
Merger reserve
The Company’s merger reserve was created as part of a Group reorganisation that
occurred in 2001/02 and has an economic relationship to the Company’s investment in
Marks and Spencer plc. Between 2019/20 and 2022/23 an amount equal to the original
merger reserve balance of £1,397.3m was transferred from the merger reserve to
retained earnings as that amount had become a realised profit in accordance with
TECH 02/17. Following the reversal of impairment recognised in 2023/24, an amount
equal to the original merger reserve balance of £1,397.3m was transferred from
retained earnings to the merger reserve, in accordance with TECH 02/17.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 181
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
GROUP FINANCIAL RECORD
2026
52 weeks
£m
2025
52 weeks
£m
2024
52 weeks
£m
2023
52 weeks
£m
2022
52 weeks
£m
Income statement
Revenue
1,2
Fashion, Home & Beauty 3,826.1 4,145.9 4,022.2 3,842.2 3,308.3
Food 9,710.8 9,085.7 8,298.8 7,348.1 6,639.6
International 543.3 585.2 719.1 741.0 937.2
Ocado 3,193.4 — — — —
Revenue 17, 273.6 13,816.8 13,040.1 11,931.3 10,885.1
Adjusted operating profit/(loss)
1,3
Fashion, Home & Beauty 213.4 478.0 437.5 365.9 330.7
Food 444.5 491.8 388.4 222.9 277.8
Ocado 15.2 (28.7) (37.3) (29.5) 13.9
Other 106.2 7.5 2.2 (0.5) 13.0
International 39.1 35.9 47. 8 67.8 73.6
Total adjusted operating profit 818.4 984.5 838.6 626.6 709.0
Adjusting items included in operating profit (281.7) (360.2) (124.4) (111.5) (136.8)
Total operating profit 536.7 624.3 714.2 515.1 572.2
Net interest payable (161.7) (109.0) (122.2) (173.3) (199.3)
Adjusting items included in net finance costs (10.4) (3.5) 80.5 133.9 18.8
Net finance costs (172.1) (112.5) (41.7) (39.4) (180.5)
Adjusted non-controlling interests 14.7 5.6 — — —
M&S Group adjusted profit before tax
4
671.4 881.1 716.4 626.6 509.7
Profit/(loss) on ordinary activities before taxation 364.6 511.8 672.5 475.7 391.7
Income tax expense (128.4) (219.9) (247. 3) (111.2) (180.3)
Profit after taxation 236.2 291.9 425.2 364.5 211.4
Marks and Spencer Group plc Annual Report and Financial Statements 2026182
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
GROUP FINANCIAL RECORD CONTINUED
2026
52 weeks
£m
2025
52 weeks
£m
2024
52 weeks
£m
2023
52 weeks
£m
2022
52 weeks
£m
Basic earnings per share¹ Basic earnings/Weighted average ordinary shares in issue 12.7p 14.6p 21.9p 18.5p 10.7p
Adjusted basic earnings per share
1
Adjusted basic earnings/Weighted average ordinary
shares in issue
23.8p 31.9p 24.6p 16.9p 16.2p
Dividend per share declared in respect of the year 4.2p 3.6p 3.0p — —
Dividend cover Adjusted earnings per share/Dividend per share 5.7x 8.9x 8.2x — —
Retail fixed charge cover Operating profit before depreciation/Fixed charges 3.7x 6.7x 5.1x 3.7x 3.5x
Statement of financial position
Net assets
5
(£m) 3,222.9 2,831.9 2,710.6 2,561.3 2,664.3
Net debt
6,7
(£m) 2,411.8 1,779.8 2,165.8 2,637.2 2,698.8
Capital expenditure (£m) 624.0 578.2 396.1 402.8 300.2
Stores and space
UK & ROI stores
2,3
1,119 1,101 1,084 1,087 1,035
UK & ROI selling space (m sq ft)
2,3
17.20 17.19 17.30 17.30 16.70
International stores
2,3
345 381 408 380 452
International selling space (m sq ft)
2,3
3.44 3.82 3.90 3.80 5.00
Staffing (full-time equivalent)
UK & ROI 48,207 47,863 49,023 48,657 42,550
International 3,197 3,392 3,616 3,435 4,558
1 Based on continuing operations.
2 FY 2024/25 revenue has been restated to move Channel Islands from International to Fashion, Home & Beauty and Food and US chain Target sales from Food to International.
3 FY 2024/25 operating profit has been restated to move Channel Islands from International to Fashion, Home & Beauty and Food and US chain Target sales from Food to International.
4 FY 2024/25 has been restated to reflect the M&S Group adjusted profit before tax. Refer to the Glossary for a complete definition.
5 Deferred tax has been restated in the comparative information. See note 1 for further details.
6 Excludes accrued interest.
7 FY 2024/25 net debt has been restated to include the Eurochange revolving credit facility (RCF) in line with our revised definition of net debt – see the Glossary for details.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 183
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES
The Group tracks a number of alternative performance measures in managing its business, which are not defined or specified under the requirements of IFRS because they
exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with IFRS,
orare calculated using financial measures that are not calculated in accordance with IFRS.
The Group believes that these alternative performance measures, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional
helpful information on the performance of the business. These alternative performance measures are consistent with how the business performance is planned and reported
within the internal management reporting to the Board. Some of these alternative performance measures are also used for the purpose of setting remuneration targets.
These alternative performance measures should be viewed as supplemental to, but not as a substitute for, measures presented in the consolidated financial information
relating to the Group, which are prepared in accordance with IFRS. The Group believes that these alternative performance measures are useful indicators of its performance.
However, they may not be comparable with similarly titled measures reported by other companies due to differences in the way they are calculated.
Alternative performance
measure (APM)
Closest equivalent
statutory measure
Reconciling items to
statutory measure Definition and purpose
Income statement measures
Sales
1,2
Revenue Consignment
sales
Sales include the gross value of consignment sales (excluding VAT). Where third-party branded goods are sold on a
consignment basis, only the commission receivable is included in statutory revenue. This measure has been
introduced given the Group’s focus on launching and growing third-party brands and is consistent with how the
business performance is reported and assessed by the Board and the Executive Committee.
Fashion, Home &
Beauty store/
Fashion, Home &
Beauty online sales
1
None Not applicable The growth in revenues on a year-on-year basis is a good indicator of the performance of the stores and online channels.
2025/26
£m
2024/25
1
£m %
Fashion, Home & Beauty
Store sales
2
2,749.8 2,813.9 (2.3)
Consignment sales (18.1) (16.9)
Store revenue
2,731.7 2,797.0 (2.3)
Online sales
2
1,165.7 1,429.5 (18.4)
Consignment sales (71.3) (80.6)
Online revenue
1,094.4 1,348.9 (18.9)
Fashion, Home & Beauty sales 3,915.5 4,243.4 (7.7 )
Consignment sales (89.4) (97.5)
Total Fashion, Home & Beauty revenue 3,826.1 4,145.9 (7.7)
1 2024/25 sales have been restated to move the Channel Islands from International to Fashion, Home & Beauty and Food.
2 Fashion, Home & Beauty store sales excludes revenue from ‘shop your way’ and Click & Collect, which are included in Fashion,
Home&Beauty online sales.
There is no material difference between sales and revenue for International.
Marks and Spencer Group plc Annual Report and Financial Statements 2026184
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES CONTINUED
Alternative performance
measure (APM)
Closest equivalent
statutory measure
Reconciling items to
statutory measure Definition and purpose
Food sales
1
None Not applicable The growth in revenues on a year-on-year basis is a good indicator of the performance of the segment. From FY26,
Food sales are adjusted for consignment sales to calculate food revenue.
2025/26
£m
2024/25
1
£m %
Food
Sales 9,719.3 9,085.7 7.0
Consignment sale (8.5) — —
Total Food revenue 9,710.8 9,085.7 6.9
1 2024/25 sales have been restated to move the Channel Islands from International to Fashion, Home & Beauty and Food and Target sales
from Food to International.
Like-for-like sales
growth
1
Movement in
revenue per
theincome
statement
Revenue from
non-retail
businesses
Revenue from
non-like-for-
like stores
Consignment
sales
The period-on-period change in sales (excluding VAT) from stores which have been trading and where there has
been no significant change (greater than 10%) in footage for at least 52 weeks and online sales. The measure is used
widely in the retail industry as an indicator of sales performance. It excludes the impact of new stores, closed stores,
stores with significant footage change and non-retail businesses such as supply chain services.
2025/26
£m
2024/25
1
£m %
Food
Like-for-like 9,260.8 8,682.9 6.7
Net new space
2
458.5 402.8
Total Food sales 9,719.3 9,085.7 7.0
Fashion, Home & Beauty
Like-for-like 3,813.3 4,123.4 ( 7.5)
Net new space 102.2 120.0
Total Fashion, Home & Beauty sales 3,915.5 4,243.4 (7.7 )
1 2024/25 sales have been restated to move the Channel Islands from International to Fashion, Home & Beauty and Food and Target sales
from Food to International.
2 Food net new space includes Gist third party revenue.
M&S.com sales/
online sales
1
None Not applicable Total sales through the Group’s online platforms. These sales are reported within the relevant Fashion, Home &
Beauty, Food and International segment results. The growth in sales on a year-on-year basis is a good indicator of
the performance of the online channel and is a measure used within the Group’s incentive plans. Refer to the
Remuneration Report for an explanation of why this measure is used within incentive plans.
Fashion, Home &
Beauty online sales
excluding furniture
1
None Not applicable Total online sales for Fashion, Home & Beauty excluding the furniture categories’ sales. This measure has been
introduced to enable a comparable indicator of the performance of the online channel as it excludes the impact of
furniture sales following the Group’s withdrawal from its two-person furniture delivery operation (see note 5).
Marks and Spencer Group plc Annual Report and Financial Statements 2026 185
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES CONTINUED
Alternative performance
measure (APM)
Closest equivalent
statutory measure
Reconciling items to
statutory measure Definition and purpose
Sales growth
atconstant
currency
1
None Not applicable The period-on-period change in sales retranslating the previous year sales at the average actual periodic exchange
rates used in the current financial year. This measure is presented as a means of eliminating the effects of exchange
rate fluctuations on the period-on-period reported results.
2025/26
£m
2024/25
1
£m %
International sales
At constant currency 543.3 576.3 (5.7)
Impact of FX retranslation — 8.9
At reported currency 543.3 585.2 (7.2)
1 2024/25 sales have been restated to move Channel Islands from International to Fashion, Home & Beauty and Food and Target sales
fromFood to International.
Sales excluding
Ocado Retail
Revenue Ocado sales
(seenote 2)
Consignment
sales
Sales excluding Ocado Retail excludes any sales attributable to Ocado in the year. This measure has been introduced
following the consolidation of Ocado Retail Limited and provides alternative relevant information to allow greater
comparability in the first year of consolidating Ocado Retail Limited.
Adjusting items None Not applicable Those items which the Group excludes from its adjusted profit metrics in order to present a further measure of the
Group’s performance. Each of these items, costs or incomes, is considered to be significant in nature and/or quantum
or are consistent with items treated as adjusting in prior periods. Excluding these items from profit metrics provides
readers with helpful additional information on the performance of the business across periods because it is consistent
with how the business performance is planned by, and reported to, the Board and the Executive Committee.
M&S Group adjusted
profit before tax
Profit before
tax
Adjusting items
(see note 5)
Adjusted
Non-
Controlling
Interest
M&S Group adjusted profit before tax includes only the Group’s share of the profits before tax and adjusting items of
companies in which the Group has a controlling interest. This measure has been introduced following the consolidation
of Ocado Retail Limited and replaces the previous ‘Profit before tax and adjusting items’ measure. This excludes
non-controlling interests in Ocado Retail Limited, India and The Sports Edit. The Group considers this presentation
provides alternative relevant information and allows greater comparability in the first year of consolidating Ocado
Retail Limited. The Group considers this to be an important measure of Group performance and is consistent with how
the business performance is reported and assessed by the Board and the Executive Committee.
Numbers presented for 2025/26 and 2024/25 represent the new APM measure ‘M&S Group adjusted profit before tax’,
where 2023/24 or 2022/23 numbers are shown these are on the old Profit before tax and adjusting items performance
measure relevant to those years.
Adjusted non-
controlling interest
Profit
attributable to
non-
controlling
interests
Adjusting items
attributable to
non-controlling
interests (see
note5)
Tax charge
attributable to
non-controlling
interests
Adjusted non-controlling interest is calculated as the profit before tax and adjusting items attributable to
non-controlling interests. This enables the Group to calculate M&S Group adjusted profit before tax.
2025/26
£m
2024/25
£m
Total NCI (23.2) (3.8)
NCI Adjusting Items 11.6 —
Tax credit (3.1) (1.8)
Adjusted non-controlling interest (before tax) (14.7) (5.6)
Marks and Spencer Group plc Annual Report and Financial Statements 2026186
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES CONTINUED
Alternative performance
measure (APM)
Closest equivalent
statutory measure
Reconciling items to
statutory measure Definition and purpose
Adjusted operating
profit
Operating profit
before adjusting
items
Operating
profit
Adjusting items
(See note 5)
Operating profit before the impact of adjusting items. The Group considers this to be an important measure of
Group performance and is consistent with how the business performance is reported and assessed by the Board and
the Executive Committee.
Adjusted operating
margin
Operating margin
before adjusting
items
None Not applicable Adjusted operating profit as a percentage of sales.
Finance income
before adjusting
items
Finance
income
Adjusting items
(See note 5)
Finance income before the impact of adjusting items. The Group considers this to be an important measure of Group
performance and is consistent with how the business performance is reported and assessed by the Board and the
Executive Committee.
Finance costs before
adjusting items
Finance costs Adjusting items
(See note 5)
Finance costs before the impact of adjusting items. The Group considers this to be an important measure of Group
performance and is consistent with how the business performance is reported and assessed by the Board and the
Executive Committee.
Net interest payable
on leases
Finance
income/costs
Finance
income/costs
(See note 6)
The net of interest income on subleases and interest payable on lease liabilities. This measure has been introduced
as it allows the Board and Executive Committee to assess the impact of IFRS 16: Leases.
Net financial
interest
Finance
income/costs
Finance
income/costs
(See note 6)
Calculated as net finance costs, excluding interest on leases and adjusting items. The Group considers this to be an
important measure of Group performance and is consistent with how the business performance is reported and
assessed by the Board and the Executive Committee.
EBIT before
adjusting items
EBIT
3
Adjusting items
(See note 5)
Calculated as profit before the impact of adjusting items, net finance costs and tax as disclosed on the face of the
consolidated income statement. This measure is used in calculating the return on capital employed for the Group.
Ocado Retail
Limited Adjusted
EBITDA
EBIT
3
Not applicable Calculated as Ocado Retail Limited earnings before interest, taxation, depreciation, amortisation, impairment and
adjusting items.
Adjusted basic
earnings per share
Earnings per
share
Adjusting items
(See note 5)
Profit after tax attributable to owners of the parent and before the impact of adjusting items, divided by the
weighted average number of ordinary shares in issue during the financial year.
This is a measure used within the Group’s incentive plans. Refer to the Remuneration Report for an explanation of
why this measure is used.
Adjusted diluted
earnings per share
Diluted
earnings per
share
Adjusting items
(See note 5)
Profit after tax attributable to owners of the parent and before the impact of adjusting items, divided by the
weighted average number of ordinary shares in issue during the financial year adjusted for the effects of any
potentially dilutive options.
Marks and Spencer Group plc Annual Report and Financial Statements 2026 187
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES CONTINUED
Alternative performance
measure (APM)
Closest equivalent
statutory measure
Reconciling items to
statutory measure Definition and purpose
Effective tax rate
before adjusting
items
Effective tax
rate
Adjusting items
and their tax
impact
(See note 5 and
note7)
Total income tax charge for the Group excluding the tax impact of adjusting items divided by the profit before tax
and adjusting items. This measure is an indicator of the ongoing tax rate for the Group.
Balance sheet measures
Net debt None Reconciliation
ofnet debt
(seenote27)
Net debt comprises total borrowings (bank and bonds net of accrued interest and lease liabilities), the spot foreign
exchange component of net derivative financial instruments that hedge the debt and the Scottish Limited Partnership
liability to the Marks and Spencer UK Pension Scheme less cash, cash equivalents and other financial assets that
contractually mature in less than 12 months. Net debt does not include contingent consideration as it is conditional
upon future events which are not yet certain at the balance sheet date.
During the period, the Group revised its definition of net debt to provide a more accurate measure of its financial
position. Previously, net debt comprised total borrowings (bank and bonds net of accrued interest and lease
liabilities), the spot foreign exchange component of net derivative financial instruments that hedge the debt, and
the Scottish Limited Partnership liability to the Marks and Spencer UK Pension Scheme, less cash, cash equivalents,
and unlisted and short-term investments.
Under the new definition, net debt comprises the same components but deducts other financial assets that
contractually mature in less than 12 months. This change reflects the Group’s view that such assets are readily
available to offset debt obligations.
As a result of this change, the Eurochange revolving credit facility (RCF) is now included within net debt. This facility
circulates weekly and is considered continuously available, providing a more reliable representation of the Group’s
net debt position. The restatement reduced reported net debt for the year ended 29 March 2025 from £1,789.6m
to£1,779.8m.
This measure is a good indication of the strength of the Group’s balance sheet position and is widely used by credit
rating agencies.
Net funds/(debt)
excluding lease
liabilities
None Reconciliation
ofnet debt
(seenote 27)
Lease liabilities
(see note 20)
Calculated as net debt less lease liabilities. This measure is a good indication of the strength of the Group’s balance
sheet position and is widely used by credit rating agencies.
Cash flow measures
Free cash flow from
operations
Operating
profit
See Financial
Review
Calculated as operating profit less adjusting items within operating profit, depreciation and amortisation before
adjusting items, cash lease payments excluding lease surrenders, working capital, defined benefit scheme pension
funding, capex and disposals, financial interest, taxation, employee-related share transactions, share of (profit)/loss
from associate, adjusting items in cash flow and loans to associates.
Free cash flow Operating
profit
See Financial
Review
Calculated as free cash flow from operations less acquisitions, investments and divestments. This measure shows
the cash generated by the Group during the year that is available for returning to shareholders and is used within
the Group’s incentive plans.
Marks and Spencer Group plc Annual Report and Financial Statements 2026188
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Alternative performance
measure (APM)
Closest equivalent
statutory measure
Reconciling items to
statutory measure Definition and purpose
Free cash flow after
shareholder returns
Operating
profit
See Financial
Review
Calculated as free cash flow less dividends paid.
This measure shows the cash retained by the Group in the year.
Other measures
Capital expenditure None Not applicable Calculated as the purchase of property, plant and equipment, investment property and intangible assets during the
year, less proceeds from asset disposals excluding any assets acquired or disposed of as part of a business
combination or through an investment in an associate.
Adjusted return on
capital employed
(ROCE)
None Not applicable Calculated as being adjusted operating profit divided by the average of opening and closing capital employed.
Themeasures used in this calculation are set out below:
2025/26
£m
2024/25
£m
Operating profit 536.7 624.3
Adjusting items included in operating profit (see note 5) 281.7 360.2
Adjusted operating profit 818.4 984.5
Net assets 3,222.9 2,831.9
Add back:
Partnership liability to the Marks & Spencer UK Pension Scheme — —
Deferred tax liabilities 472.5 318.9
Non-current borrowings and other financial liabilities 3,120.7 2,588.7
Retirement benefit deficit 79.2 122.7
Current tax liabilities 1.2 1.2
Derivative financial instruments 24.9 34.4
Less:
Investment property (11.0) (11.2)
Retirement benefit assets — —
Current tax assets (58.5) (71.1)
Deferred tax assets (13.3) (13.9)
Net operating assets 6,838.6 5,801.6
Add back: Provisions related to adjusting items 147.9 141.6
Capital employed 6,986.5 5,943.2
Average capital employed 6,464.8 5,991.9
ROCE % 12.7% 16.4%
This measure is used within the Group’s incentive plans. Refer to the Remuneration Report for an explanation of why
this measure is used within incentive plans.
1 Food and International segments have been restated to move revenue related to sales from Target from Food to International.
2 Channel Islands have been removed from the International segment and split between the Fashion, Home & Beauty and Food segments.
3 EBIT is not defined within IFRS but is a widely accepted profit measure being earnings before interest and tax.
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES CONTINUED
Marks and Spencer Group plc Annual Report and Financial Statements 2026 189
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Tuesday 7 July 2026 at 11am
Held at, and broadcast from:
Waterside House
35 North Wharf Road
London W2 1NW
This document is important and
requires your immediate attention
If you are in any doubt as to the action you
should take, you should immediately consult
your stockbroker, bank manager, solicitor,
accountant or other independent professional
adviser authorised under the Financial Services
and Markets Act 2000 if you are resident in the
United Kingdom or, if you reside elsewhere,
another appropriately authorised financial
adviser. If you have sold or otherwise transferred
all your shares in the Company, please forward
this document and accompanying documents
(except any personalised form of proxy, if
applicable) to the purchaser or transferee,
ortothe stockbroker or other agent through
whom the sale or transfer was effected, for
transmission to the purchaser or transferee.
Notice of
Annual General
Meeting 2026
Business of the meeting
The Annual General Meeting (‘AGM’) is your opportunity
to hear from the Board, and your engagement both in
advance and on the day is important to us. During the
meeting, the Board will share an update on the Company’s
strategy and performance over the past year and
present the resolutions as set out in this Notice of AGM
for your consideration and vote. We’re pleased to
welcome back journalist and author Anita Anand, who
will once again serve as your shareholder advocate to
ensure your voice is heard.
The formal Notice and an explanation of each of the
resolutions to be voted on at the AGM are set out on
pages 193 to 200.
AGM arrangements
The 2026 AGM will be a digitally-enabled meeting
held at, and broadcast from, M&S’ Waterside House
Support Centre at 11am on Tuesday 7 July 2026.
The Board is committed to leading on shareholder
engagement and continues to view a digitally-enabled
meeting as the most effective way for directors to
connect with the widest range of shareholders.
Engagement has increased since we adopted a digital
approach, and we look forward to your participation
again this year.
You are invited to engage with the AGM electronically via
our dedicated Lumi AGM website: https://meetings.
lumiconnect.com/100-348-343-158. Your questions and
voting instructions can be submitted on this website,
both during the meeting and in advance. Details on how
to join the meeting electronically and submit votes and
questions can be found on the following pages.
If you wish to attend the AGM in person as part of our
studio audience, please register your intention to do so
in advance to help us manage capacity on the day.
Please email privateshareholders@marks-and-
spencer.com, providing your full name and Shareholder
Reference Number (‘SRN’), or nominee holding details,
as applicable. Further details on joining in person are
on page 192.
Voting and questions
We encourage all shareholders to vote online and
pre-submit questions in advance of the AGM, so your
views can be heard by the Board even if you are unable
to join us on the day. There are several options available
to you for submitting these, including video recorded
questions to be played back during the meeting. Methods
of voting and submitting questions are on pages 191
and 192.
Engagement throughout theyear
If you would like to share your views on the business
and hear more from our leadership team throughout
the year, applications to be part of our 2026/27
Shareholder Panel are now open. The panel, which
meets two to three times a year, is mainly digital to
allow members to join from wherever they are located.
Register your interest by emailing
privateshareholders@marks-and-spencer.com before
31 July 2026. After the closing date for applications,
thepanel will be selected at random and successful
applicants will be contacted by email.
How to engage
Your engagement at our 2026 AGM is important
tous. You can:
•
Vote on our resolutions in advance and on the day.
•
Submit your questions to the Board via the Lumi
website or by email.
•
Watch the AGM broadcast live on the Lumi website
orafter the meeting on our corporate website.
Joining us online?
Locate your SRN and PIN on your Notice of
Availability and check you can log on to the Lumi
AGM website at https://meetings.lumiconnect.
com/100-348-343-158.
Joining us in person?
Pre-register no later than 11am on 3 July 2026
byemailing privateshareholders@marks-and-
spencer.com, providing your full name and SRN
ornominee holding details, as applicable.
KEY INFORMATION
Use the QR code to
watch our Notice of
Meeting video guide.
NOTICE OF MEETING
Marks and Spencer Group plc Annual Report and Financial Statements 2026190
Timings
You now have a month-long window to engage
with us ahead of the meeting:
Date
10am Monday
1 June 2026
Lumi AGM website open.
Opportunity to pre-submit
votes and questions.
11am Friday
3 July 2026
Voting and questions pre-
submission window closes.
Logging in
The Lumi AGM website can be accessed using most
well-known internet browsers such as Edge, Chrome,
Firefox and Safari on a PC, laptop or internet-
enabled device such as a tablet or smartphone.
Follow this link https://meetings.lumiconnect.com/100-
348-343-158 or scan the QR code below to log in.
You will be prompted to enter your Shareholder
Reference Number (‘SRN’) and PIN, both of which
can be found on your Notice of Availability or
Voting Card sent by post.
Duly appointed proxies or corporate
representatives should refer to note 21 for
details of how to obtain their unique username
and password to join the meeting.
Voting
You can submit your voting instructions before
the meeting via:
1. the Lumi AGM website;
2. Equiniti’s Shareview website;
3. CREST or Proxymity electronic proxy
appointment platforms; or
4. completing and returning a paper proxy form.
You can find the resolutions and explanatory notes on
pages 193 to 198.
To cast your vote on the Lumi website, select the
‘Voting’ tab then click the option that
corresponds with the way you wish to vote: ‘For’,
‘Against’ or ‘Withheld’. Simply select a different
option if the wrong choice is selected.
Please note that a vote Withheld is not a vote in
law and will not be counted in the calculation of
votes For and Against each resolution.
Votes cast in advance using any of the above
methods must be received by 11am on Friday
3July 2026.
Click here to
access the
Lumiwebsite.
Click here to watch a video on how
to navigate the Lumi website.
Asking questions
Questions for the Board can be submitted
before 11am on Friday 3 July 2026 via:
1. the ‘Messaging’feature on theLumi AGM
website;
2. email to AGMquestionsubmission@marks-
and-spencer.com; or
3. recorded video message submitted to the
email above. Please ensure recordings last no
longer than one minute.
By submitting a video question, you consent to
your video being played during the AGM
broadcast. Please note, the AGM recording will
also be made publicly available on our corporate
website after the meeting.
Support
If you experience any issues or cannot find your
SRN please contact Equiniti by emailing hybrid.
help@equiniti.com quoting your full name and
address. Mailboxes are monitored 9am to 5pm
Monday to Friday (excluding public holidays in
England and Wales).
Paper proxy forms are available from Equiniti on
request; you can call our shareholder helpline on
0345 609 0810 or use any of Equiniti’s alternative
contact details listed on page 201.
ENGAGING IN ADVANCE
NOTICE OF MEETING
Marks and Spencer Group plc Annual Report and Financial Statements 2026 191
Asking questions
Online: you are able to submit questions live
during the meeting on the Lumi website by
clicking on the ‘Messaging’ tab.
In person: you will have the opportunity to
submit a question upon arrival and registration
at Waterside House.
Where a number of questions are received
covering the same topic, Anita Anand, our
shareholder advocate, will group these to
address as many subjects as possible.
Joining inperson
If you are joining us on the day, please help us
manage capacity by registering in advance. Email
privateshareholders@marks-and-spencer.com
with your name and SRN.
The meeting will be held at our Waterside House
Support Centre which is well served by public
transport: Waterside House, 35 North Wharf Road,
London W2 1NW. Scan the QR code below for our
Google Maps location.
As the meeting will be broadcast live,
shareholders in attendance may be included in
the broadcast available on our website following
the meeting. By attending the meeting, you are
consenting to being filmed.
Seats in our studio audience are limited and
therefore only registered shareholders, proxies
or corporate representatives will be admitted to
the meeting. If you have any specific accessibility
requirements, please include these in your
pre-registration email, so appropriate
arrangements can be made.
Joining online
You can watch the broadcast live, vote and ask
questions by logging on to the Lumi AGM
website from 10am on 7 July 2026.
Voting
Voting on all resolutions will be by way of a poll.
The voting options will appear on screen after
the resolutions have been proposed.
To vote online, select the ‘Voting’ tab then click
the option that corresponds with the way you
would like to vote as detailed on page 191. If you
wish to cancel your ‘live’ vote, press ‘Cancel’.
Please note that an active internet connection is
required to cast your vote successfully when the
Chairman commences polling on the resolutions.
It is the responsibility of shareholders to ensure
connectivity for the duration of the meeting.
To vote in person: polling cards will be available
on request for shareholders attending the
meeting in person.
You can find the
resolutions and
explanatory notes
on pages 193 to 198.
Click here to
watch a video
on how to
navigate the
Lumi website.
Timings
Date
10am on 7
July 2026
Meeting registration and question
submission opens.
11am AGM begins.
Until
approx.
1pm
The AGM will last for approximately
two hours and will consist of:
•
An introduction from the Chairman.
•
Presentations from the Executive
team.
•
Opportunity for Q&A with Board
members.
•
Voting on resolutions, once the
poll is declared open.
Following
the meeting
(as soon as
practicable)
•
Results of the poll will be released
to the London Stock Exchange.
•
The meeting will be available to
watch on our corporate website:
corporate.marksandspencer.com.
•
Summarised shareholder questions
and answers will be published on
the corporate website.
Paddington Basin
Paddington
Harrow Road
Edgware
Road
A404
A5
M&S AGM
Waterside House
35North Wharf Road
London W2 1NW
St Mary’s Hospital
North Wharf Road
Click here to
access map.
Follow this link https://meetings.
lumiconnect.com/100-348-343-158 or scan
the QR code and input your SRN andPIN
tolog in.
JOINING ON THE DAY
NOTICE OF MEETING
Marks and Spencer Group plc Annual Report and Financial Statements 2026192
1. To receive the report and accounts
The Board asks that shareholders receive the Annual
Report and Financial Statements for the 52 weeks
ended 28 March 2026.
2. Approval of the Directors’
Remuneration Report
The Directors’ Remuneration Report (excluding the
Directors’ Remuneration Policy), sets out the pay and
benefits received by each of the directors for the year
ended 28 March 2026. In line with legislation, this vote is
advisory and the directors’ entitlement to remuneration
is not conditional on it.
3. Approval of the Directors’
Remuneration Policy
The Directors’ Remuneration Policy (the ‘Policy’) can be
found on pages 71 to 80 of the Annual Report. It sets
out the Company’s policy on remuneration and potential
payments to directors going forward. The Policy must
be approved by shareholders (by means of a separate
resolution) at least once every three years. The current
Policy was approved by shareholders at the AGM in
2023 and is therefore due for renewal. The Policy for
which we are seeking your approval this year is largely
unchanged from that approved by shareholders in
2023. The key changes to the Policy are shown on page
71 of the Annual Report. Once the Policy is approved,
the Company will not be able to make a remuneration
payment to a current or future director or a payment
for loss of office to a current or past director unless
that payment is consistent with the Policy or has been
approved by a resolution of the members of the Company.
4. Final dividend
The Board proposes a final dividend of 3.0p per share
for the year ended 28 March 2026. If approved, the
recommended final dividend will be paid on 10 July 2026
to all shareholders who were on the Register of
Members at the close of business on 5 June 2026.
5–13. Election of directors
The directors believe that the Board continues to
maintain an appropriate balance of knowledge and
skills and that all the Non-Executive Directors are
independent in character and judgement. This follows a
process of evaluation as part of the Board’s performance
review, which confirms that each director makes an
effective and valuable contribution to the Board and
demonstrates commitment to the role (including
making sufficient time available for Board and
Committee meetings and other duties as required).
More information can be found on pages 50 to 52 and
55 to 57 of the Annual Report.
Roger Burnley and Sean Doyle joined the Board as
Non-Executive Directors on 1 December 2025. Roger
brings with him extensive experience in the food retail
industry and supply chain transformation. Sean brings
strong leadership and operating skills from the
complex and challenging airline industry, also
representing an iconic British brand.
In accordance with the UK Corporate Governance Code,
all directors will stand for election or re-election,
asrelevant, at the AGM this year. Biographies are
available on pages 51 to 52 of the Annual Report,
withfurther details available on our website,
corporate.marksandspencer.com. It is the Board’s view
that thedirectors’ biographies illustrate why each of
their contributions are, and continue to be, important
to theCompany’s long-term sustainable success.
14–15. Appointment and remuneration
of auditor
On the recommendation of the Audit & Risk Committee,
the Board proposes in resolution 14 that Deloitte LLP be
reappointed as auditor of the Company. Resolution 15
proposes that the Audit & Risk Committee be authorised
to determine the level of the auditor’s remuneration.
16. Authority to make political donations
The Company’s policy is that it does not, directly or
through any subsidiary, make what are commonly
regarded as donations to any political party. The
authorities being requested from shareholders are not
designed to change this. However, the Companies Act
2006 (the ‘Act’) defines political donations very broadly
and, as a result, covers activities that form part of
normal relationships and which are accepted as a way
of engaging with stakeholders and opinion formers to
ensure the Company’s issues and concerns are considered
and addressed. Activities of this nature are not designed
to support any political party or influence public support
for a particular party and would not be thought of as
political donations in the ordinary sense of those words.
Shareholder approval is being sought on a
precautionary basis only.
The resolution, if passed, will renew the directors’
authority until the conclusion of the AGM in 2027 oron
1 October 2027, whichever is sooner, to make donations
and incur expenditure which might otherwise be caught
by the terms of the Act, up to an aggregate amount of
£50,000 for the Company and forsubsidiarycompanies.
EXPLANATORY NOTES TO THE RESOLUTIONS
NOTICE OF MEETING
Marks and Spencer Group plc Annual Report and Financial Statements 2026 193
17. Renewal of the powers of the Board
to allot shares
Paragraph (A) of this resolution 17 would give the
directors the authority to allot ordinary shares of the
Company up to an aggregate nominal amount equal
to£6,887,609.21 (representing 688,760,921 ordinary
shares of £0.01 each). This amount represents approximately
one-third (33.33%) of theCompany’s issued ordinary
share capital as at 19May 2026, the latest practicable
date before thepublicationof this Notice.
In line with guidance issued by the Investment
Association, paragraph (B) of this resolution would
givethe directors authority to allot ordinary shares
inconnection with a pre-emptive offer in favour of
ordinary shareholders up to an aggregate nominal
amount equal to £13,775,218.42 (representing 1,377,521,842
ordinary shares), as reduced by the nominal amount of
any shares issued under paragraph (A) of this resolution.
This amount (before any reduction) represents
approximately two-thirds (66.66%) of the Company’s
issued ordinary share capital as at 19 May 2026, the latest
practicable date before the publication of this Notice.
The authorities sought under paragraphs (A) and (B) of
this resolution will expire at the conclusion of the AGM
in 2027 or on 1 October 2027, whichever is sooner. The
directors have no present intention to exercise either of
the authorities sought under this resolution; however,
the Board wishes to ensure that the Company has
maximum flexibility in managing the Group’s capital
resources. As at the date of this Notice, no shares are
held by the Company in treasury.
18–19. Authority to disapply
pre-emption rights
Resolutions 18 and 19 are proposed as special
resolutions. If the directors wish to allot new shares or
other equity securities or sell treasury shares for cash
(other than in connection with an employee share
scheme), company law requires that these shares are
first offered to shareholders in proportion to their
existing holdings.
At last year’s AGM, two separate special resolutions
were passed, in line with institutional shareholder
guidelines. These empowered the directors to allot
equity securities for cash without first offering them
toexisting shareholders in proportion to their existing
holdings. It is proposed that these authorities be
renewed, in line with institutional shareholder guidelines,
including the Statement of Principles on Disapplying
Pre-Emption Rights issued by the Pre-Emption Group
inNovember 2022 (the ‘Statement of Principles’).
Whilethere is no current intention to make use of these
authorities, the Board believes it is in the best interests
of shareholders for the directors to have the flexibility
to take advantage of these authorities ifrequired.
If approved, resolution 18, which follows the
Pre-Emption Group’s template resolution, will
authorisethe directors, in accordance with the
Statement of Principles, to issue shares in connection
with pre-emptive offers (paragraph (A) ofthe resolution),
and otherwise to issue shares and/orsell treasury
shares for cash:
1) under paragraph (B) of the resolution, up to an
aggregate nominal amount of £2,066,282.76
(representing 206,628,276 ordinary shares), being
approximately 10% of the Company’s issued
ordinary share capital as at 19 May 2026 (the latest
practicable date before the publication of this
Notice); and
2) under paragraph (C) of the resolution, up to an
additional aggregate amount equal to 20% of any
allotment under paragraph (B) of the resolution, for
the purposes of making a follow-on offer to existing
shareholders as described in the Statement of
Principles. The maximum additional nominal
amount that could be issued under paragraph (C)
ofthe resolution (based on the authority under
paragraph (B) being used in full) is £413,256.55
(representing approximately 2% of the Company’s
issued ordinary share capital as at 19 May 2026).
The total maximum nominal amount of equity securities
to which resolution 18 relates is £2,479,539.31
(representing approximately 12% of theCompany’s
issued ordinary share capital as at 19May 2026).
The purpose of resolution 19, which also follows the
Pre-Emption Group’s template resolution and reflects
the Statement of Principles, is to authorise the directors
to allot new shares and other equity securities pursuant
to the allotment authority given by resolution 17, and/or
sell treasury shares for cash, without first being
required to offer such securities to existing shareholders:
1) under paragraph (A) of the resolution, up to a further
nominal amount of £2,066,282.76 (representing
206,628,276 ordinary shares), being approximately
10% of the Company’s issued ordinary share capital
as at 19 May 2026 (the latest practicable date before
the publication of this Notice), to be used only in
connection with an acquisition or specified capital
investment of a kind contemplated by the
Statementof Principles, and which is announced
contemporaneously with the allotment, or which has
taken place in the preceding 12-month period and is
disclosed in the announcement of the issue; and
2) under paragraph (B) of the resolution, up to an
additional aggregate amount equal to 20% of any
allotment under paragraph (A) of the resolution,
forthe purposes of making a follow-on offer to
existing shareholders as described in the Statement
of Principles. The maximum additional nominal
amount that could be issued under paragraph (B)
ofthe resolution (based on the authority under
paragraph (A) being used in full) is £413,256.55
(representing approximately 2% of the Company’s
issued ordinary share capital as at 19 May 2026).
The total maximum nominal amount of equity securities
to which resolution 19 relates is £2,479,539.31
(representing approximately 12% of theCompany’s
issued ordinary share capital as at 19May 2026).
EXPLANATORY NOTES TO THE RESOLUTIONS CONTINUED
NOTICE OF MEETING
Marks and Spencer Group plc Annual Report and Financial Statements 2026194
18–19. Authority to disapply
pre-emption rights continued
The authority granted by resolution 19 would be in
addition to the general authority to disapply pre-emption
rights under resolution 18. The maximum nominal value
of equity securities that could be allotted if both
authorities were used would be £4,959,078.62, which
represents approximately 24% of the Company’s issued
ordinary share capital as at 19 May 2026, being the latest
practicable date before the publication of this Notice.
The Board confirms, should it exercise the authorities
granted by resolutions 18 or 19, it intends to follow best
practice as regards their use, including: (i) following the
shareholder protections in Part 2B of the Statement of
Principles; and (ii) in respect of any follow-on offer,
following the expected features set out in paragraph 3
of Part 2B of the Statement of Principles.
The directors have no current intention to allot shares
except in connection with employee share schemes.
These authorities will expire at the conclusion of the
AGM in 2027 or on 1 October 2027, whichever is sooner.
20. Authority for the Company to
purchase its own shares
Authority is sought for the Company to purchase
upto10% of its issued ordinary shares, renewing
theauthority granted by the shareholders at
previousAGMs.
The directors have no present intention of exercising
the authority to purchase the Company’s own shares;
however, this authority would provide them with the
flexibility to do so in the future, if the prevailing market
conditions made such purchases in the best interests
ofshareholders generally.
Ordinary shares purchased by the Company pursuant
to this authority may be held in treasury or may be
cancelled. It remains the Company’s intention to cancel
any shares it buys back rather than hold them in
treasury. The Company currently holds no shares in
treasury. The resolution specifies the minimum and
maximum prices which may be paid for any ordinary
shares purchased under this authority, reflecting the
requirements of the UK Listing Rules.
The Company has options outstanding over
34,421,283ordinary shares, representing 1.67% of
theCompany’s issued ordinary share capital as at
19May 2026, the latest practicable date before the
publication of this Notice.
If the existing authority given at the 2025 AGM and
theauthority now being sought by this special
resolution wereto be fully used, these options would
represent 1.85% of the Company’s ordinary share
capital in issueat that date.
21. Notice of general meetings
In accordance with the Act, the notice period for
general meetings (other than the AGM) is 21 clear days’
notice unless the Company:
i. has gained shareholder approval for the holding of
general meetings on 14 clear days’ notice by passing
a special resolution at the most recent AGM; and
ii. offers the facility for all shareholders to vote by
electronic means.
The Company would like to preserve its ability to call
general meetings (other than the AGM) on 14 clear days’
notice. This shorter notice period would not be used as
a matter of routine, but only where the flexibility is
merited by the business of the meeting and is thought
to be in the interests of shareholders as a whole.
Special resolution 21 seeks such approval and, should
this resolution be approved, it will remain valid until the
end of the next AGM. This is the same authority as was
sought and granted at last year’s AGM.
Recommendation
Your directors believe that the proposals described in
resolutions 1–21 are in the best interests of the Company
and its shareholders as a whole, and recommend you
give them your support by voting in favour of each of
them, as they intend to in respect of their own
beneficial shareholdings.
EXPLANATORY NOTES TO THE RESOLUTIONS CONTINUED
NOTICE OF MEETING
Marks and Spencer Group plc Annual Report and Financial Statements 2026 195
Notice is given that the Annual General Meeting of
Marks and Spencer Group plc (the ‘Company’) will
beheld at, and broadcast from, Waterside House,
35North Wharf Road, London W2 1NW, in accordance
with the information provided on page 192, on
Tuesday 7 July 2026 at 11am (the ‘AGM’) for the
purposes set out below.
Resolutions 1 to 17 will be proposed as ordinary
resolutions, and resolutions 18 to 21 will be proposed as
special resolutions.
1. To receive the Annual Report and Financial Statements
for the 52 weeks ended 28 March 2026.
2. To approve the Directors’ Remuneration Report for
the year ended 28 March 2026, as set out on pages
66 to 92 of the Annual Report (excluding the
Directors’ Remuneration Policy on pages 71 to 80).
3. To approve the Directors’ Remuneration Policy as set
out on pages 71 to 80 of the Annual Report.
4. To declare a final dividend for the year ended
28March 2026 of 3.0p per ordinary share, payable
on 10 July 2026 to shareholders on the Register of
Members as at the close of business on 5 June 2026.
To re-elect the following directors who are seeking
annual re-election in accordance with the UK Corporate
Governance Code:
5. Archie Norman
6. Stuart Machin
7. Alison Dolan
8. Fiona Dawson
9. Evelyn Bourke
10. Tamara Ingram
11. Sapna Sood
To elect the following directors appointed to the Board
since the last Annual General Meeting:
12. Roger Burnley
13. Sean Doyle
14. To resolve that Deloitte LLP be, and is hereby,
reappointed as auditor of the Company to hold
office until the conclusion of the next general meeting
at which accounts are laid before the Company.
15. To resolve that the Audit & Risk Committee
determine the remuneration of the auditor on behalf
of the Board.
16. Political donations
To resolve that, in accordance with Section 366 of the
Companies Act 2006, the Company, and any company
which, at any time during the period for which this
resolution has effect, is a subsidiary of the Company, be
authorised to:
(A) make political donations to political parties and/or
independent election candidates, not exceeding
£50,000 in total;
(B) make political donations to political organisations,
other than political parties, not exceeding £50,000
in total; and
(C) incur political expenditure not exceeding £50,000
intotal;
provided that the aggregate amount of any such
donations and expenditure shall not exceed £50,000
during the period beginning with the date of the
passing of this resolution and ending at the conclusion
of the AGM to be held in 2027; or on 1 October 2027,
whichever is sooner.
For the purpose of this resolution, the terms ‘political
donations’, ‘political parties’, ‘independent election
candidates’, ‘political organisations’ and ‘political
expenditure’ have the meanings set out in Sections 363
to 365 of the Companies Act 2006.
17. Directors’ authority to allot shares
To resolve that the directors are authorised under
Section 551 of the Companies Act 2006 generally and
unconditionally to exercise all the powers of the Company
to allot shares in the Company and to grant rights to
subscribe for or convert any security into shares in
theCompany:
(A) up to a nominal amount of £6,887,609.21 (such
amount to be reduced by any allotments or grants
made under paragraph (B) below in excess of such
sum); and
(B) comprising equity securities (as defined in Section
560(1) of the Companies Act 2006) up to a nominal
amount of £13,775,218.42 (such amount to be
reduced by any allotments made under paragraph
(A) above) in connection with a pre-emptive offer:
i. to ordinary shareholders in proportion (as nearly
as may be practicable) to their existing
holdings;and
ii. to holders of other equity securities as required
by the rights of those securities or as the
directors otherwise consider necessary;
and so that the directors may impose any limits or
restrictions and make any arrangements which they
consider necessary or appropriate to deal with any
treasury shares, fractional entitlements, record dates,
legal, regulatory or practical problems in, or under the
laws of, any territory or any other matter.
The authorities conferred on the directors to allot
securities under paragraphs (A) and (B) will expire at the
conclusion of the AGM of the Company to be held in
2027 or on 1 October 2027, whichever is sooner, unless
previously revoked or varied by the Company, and such
authority shall extend to the making before such expiry
of an offer or an agreement that would or might require
relevant securities to be allotted after such expiry, and
the directors may allot relevant securities in pursuance
of that offer or agreement as if the authority conferred
hereby had not expired.
NOTICE OF MEETING
NOTICE OF MEETING
Marks and Spencer Group plc Annual Report and Financial Statements 2026196
NOTICE OF MEETING CONTINUED
18. General disapplication of
pre-emption rights
To resolve as a special resolution that, subject
tothepassing of resolution 17, the directors be
empowered to allot equity securities (as defined in
Section 560(1) of the Companies Act 2006) for cash
under the authority given by that resolution 17 (set
outin this Notice of Meeting), and/or to sell ordinary
shares held by the Company as treasury shares for
cash, as if Section 561 of the Companies Act 2006
didnot apply to any such allotment or sale, provided
that such authority be limited:
(A) to the allotment of equity securities and/or sale
oftreasury shares in connection with an offer of,
orinvitation to apply for, equity securities:
i. to ordinary shareholders in proportion (as
nearlyas may be practicable) to their existing
holdings; and
ii. to holders of other equity securities as required
by the rights of those securities or as the
directors otherwise consider necessary;
and so that the directors may impose any limits or
restrictions and make any arrangements which they
consider necessary or appropriate to deal with any
treasury shares, fractional entitlements, record
dates, legal, regulatory or practical problems in,
orunder the laws of, any territory or any other
matter; and
(B) in the case of the authority granted under
paragraph (A) of resolution 17 and/or in the case
ofany sale of treasury shares, to the allotment of
equity securities and/or sale of treasury shares
(otherwise than under paragraph (A) above) up to
anominal amount of £2,066,282.76; and
(C) to the allotment of equity securities and/or sale of
treasury shares (otherwise than under paragraph (A)
or paragraph (B) above) up to a nominal amount
equal to 20% of any allotment of equity securities
and/or sale of treasury shares from time to time
under paragraph (B) above, such authority to be
used only for the purposes of making a follow-on
offer which the Board of the Company determines
to be of a kind contemplated by paragraph 3 of
Section 2B of the Statement of Principles on
Disapplying Pre-Emption Rights most recently
published by the Pre-Emption Group prior to the
date of this Notice of Meeting,
and shall expire at the conclusion of the AGM to be
heldin 2027 or on 1 October 2027, whichever is sooner
(unless previously revoked or varied by the Company
ingeneral meeting), provided that the Company
maybefore that date make offers, and enter into
agreements, which would, or might, require equity
securities to be allotted (and/or treasury shares to be
sold) after the authority ends and the directors may
allot equity securities (and/or sell treasury shares)
under any such offer or agreement as if the authority
had not ended.
19. Additional disapplication of
pre-emption rights
To resolve as a special resolution that, subject to the
passing of resolution 17, the directors be empowered in
addition to any authority granted under resolution 18 to
allot equity securities (as defined in Section 560(1) of the
Companies Act 2006) for cash under the authority given
by that resolution 17 (set out in this Notice of Meeting)
and/or to sell ordinary shares held by the Company as
treasury shares for cash as if Section 561 of the Companies
Act 2006 did not apply toany such allotment or sale,
provided that such authority be limited:
(A) to the allotment of equity securities and/or sale
oftreasury shares up to a nominal amount of
£2,066,282.76, such authority to be used only for
thepurposes of financing (or refinancing, if the
authority is to be used within 12 months after the
original transaction) a transaction which the
directors of the Company determine to be either
anacquisition or a specified capital investment of
akind contemplated by the Statement of Principles
on Disapplying Pre-Emption Rights most recently
published by the Pre-Emption Group prior to the
date of this Notice of Meeting; and
(B) to the allotment of equity securities or sale of
treasury shares (otherwise than under paragraph (A)
above) up to a nominal amount equal to 20% of any
allotment of equity securities or sale of treasury
shares made under paragraph (A) above, such
authority to be used only for the purposes of
making a follow-on offer which the Board of the
Company determines to be of a kind contemplated
by paragraph 3 of Section 2B of the Statement of
Principles on Disapplying Pre-Emption Rights most
recently published by the Pre-Emption Group prior
to the date of this Notice of Meeting,
and shall expire at the conclusion of the AGM to be held
in 2027 or on 1 October 2027, whichever is sooner
(unless previously revoked or varied by the Company
ingeneral meeting) provided that the Company may
before that date make offers, and enter into agreements,
which would, or might, require equity securities to be
allotted (and/or treasury shares to be sold) after the
authority ends and the directors may allot equity
securities (and/or sell treasury shares) under any such
offer or agreement as if the authority had not ended.
20. Company’s authority to purchase
its own shares
To resolve as a special resolution that the Company
isauthorised for the purposes of Section 701 of the
Companies Act 2006 to make one or more market
purchases (as defined in Section 693(4) of the Companies
Act 2006) of its ordinary shares of £0.01 each, such
power to be limited:
(A) to a maximum number of 206,628,276 ordinary
shares; and
(B) by the condition that the minimum price which may
be paid for an ordinary share is £0.01 and the
maximum price which may be paid for an ordinary
share is the highest of:
i. an amount equal to 105% of the average market
value of an ordinary share for the five business
days immediately preceding the day on which
that ordinary share is contracted to be
purchased; and
NOTICE OF MEETING
Marks and Spencer Group plc Annual Report and Financial Statements 2026 197
NOTICE OF MEETING CONTINUED
ii. the higher of the price of the last independent
trade of an ordinary share and the highest
current independent bid for an ordinary share
onthe trading venue where the purchase is
carried out;
in each case, exclusive of expenses, such power to
apply until the end of the AGM to be held in 2027 or
until 1 October 2027, whichever is sooner, but in each
case so that the Company may enter into a contract
to purchase ordinary shares which will or may be
completed or executed wholly or partly after the
power ends and the Company may purchase
ordinary shares pursuant to any such contract
asifthe power had not ended.
21. Calling of general meetings on
14days’ notice
To resolve as a special resolution that a general
meeting other than the Annual General Meeting may
becalled on no fewer than 14 clear days’ notice.
By order of the Board
Nick Folland
General Counsel & Company Secretary
London, 19 May 2026
Registered office: Waterside House, 35 North Wharf
Road, London W2 1NW. Registered in England and
Wales. No. 4256886
Notes
1. Biographies of the directors seeking election (or
re-election) are in the Annual Report on pages 51 to
52, including their membership of the principal
Board Committees, with further details available
onour website, corporate.marksandspencer.com.
The notice periods of the current directors are set
out in the Directors’ Remuneration Report on pages
90 and 92.
2. Registered shareholders: members are entitled to
appoint a proxy to exercise all or any of their rights
to attend, speak and vote on their behalf at the
AGM. Members may appoint more than one proxy
inrelation to the AGM, provided that each proxy
isappointed to exercise the rights attached to a
different share or shares held by that shareholder.
Aproxy need not be a shareholder of the Company.
To request one or more paper proxy forms
(toappoint more than one proxy), please contact
ourshareholder helpline on +44 (0)345 609 0810.
Please indicate the number of shares in relation
towhich each proxy is authorised to act in the box
below the proxy holder’s name. Please also indicate
if the instruction is one of multiple instructions
being given, and if a proxy is being appointed for
less than your full entitlement, please enter the
number of shares in relation to which each such
proxy is entitled to act in the box below the relevant
proxy holder’s name. The proxy form assumes you
wish to vote on all your shares in the same way.
Tovote only part of your holding or to vote some
shares one way and some another, please contact
the shareholder helpline. All proxy forms must be
signed and should be returned together.
3. If you would like to submit your vote electronically
in advance of the AGM, you can do so by accessing
the Lumi website, https://meetings.lumiconnect.
com/100-348-343-158. Instructions are available on
page 191 of this Notice. Alternatively, you can submit
your instruction by visiting shareview.co.uk. All
advance proxy votes, regardless of how they are
cast, are to be returned by 11am on Friday 3 July 2026.
If you return paper and electronic instructions,
those received last by the Registrar before 11am on
Friday 3 July 2026 will take precedence. Electronic
communication facilities are available to all
shareholders and those that use them will not be
disadvantaged.
4. In the case of joint holders, where more than one of
the joint holders purports to appoint a proxy, only
the appointment submitted by the most senior
holder will be accepted. Seniority is determined by
the order in which the names of the joint holders
appear in the Company’s Register of Members in
respect of the joint holding (the first-named being
the most senior).
5. Votes submitted in advance of the meeting using
the Lumi website will constitute an instruction to
appoint the Chairman of the meeting as proxy.
Theshares covered by the instruction will be voted
as directed by the shareholder in respect of the
resolutions referred to in this Notice of Meeting
atthe meeting and at any adjournment of it.
6. To be valid, any proxy form or other instrument
appointing a proxy delivered by post or by hand
(during normal business hours only) must be
received at Equiniti, Highdown House, Yeoman Way,
Worthing, West Sussex BN99 6DA, no later than
11amon Friday 3 July 2026.
7. The appointment of a proxy electronically, the return
of a completed paper proxy form, other such
instrument or any CREST/Proxymity proxy instruction
(as described on the following page) will not prevent
a shareholder from attending and voting at the
meeting if they wish to do so. You must inform the
Company’s Registrar in writing of any termination
ofthe authority of a proxy.
8. Indirect shareholders: any person to whom this
Notice is sent who is a person nominated under
Section 146 of the Companies Act 2006 to enjoy
information rights (a ‘Nominated Person’) may,
under an agreement between them and the
shareholder by whom they were nominated, have a
right to be appointed (or to have someone else
appointed) as a proxy for the AGM. If a Nominated
Person has no such proxy appointment right or does
not wish to exercise it, they may, under any such
agreement, have a right to give instructions to the
shareholder as to the exercise of voting rights.
NOTICE OF MEETING
Marks and Spencer Group plc Annual Report and Financial Statements 2026198
NOTICE OF MEETING CONTINUED
Notes continued
9. The statements of the rights of shareholders
inrelation to the appointment of proxies in
paragraphs 2 to 7 do not apply to Nominated
Persons. The rights described in these
paragraphscan only be exercised by
shareholdersof the Company.
10. Nominated Persons are reminded they should
contact the registered holder of their shares
(andnot the Company) on matters relating to
theirinvestments in the Company.
11. To be entitled to join the meeting, submit questions
and vote (and for the purpose of the determination
by the Company of the votes they may cast),
shareholders must be entered on the Register of
Members of the Company by 6.30pm on Friday 3
July 2026 (or, in the event of any adjournment,
6.30pm on the date which is two working days prior
to the adjourned meeting). Changes to the Register
of Members after the relevant deadline will be
disregarded in determining the rights of any person
to join, submit questions and vote at the meeting.
12. The following documents are available for inspection
at an agreed time at the Company’s registered
office: Waterside House, 35 North Wharf Road,
London W2 1NW. Email company.secretary@
marks-and-spencer.com during normal business
hours on any weekday (excluding public holidays).
i. Copies of the Executive Directors’ service contracts.
ii. Copies of the Non-Executive Directors’ letters
ofappointment.
iii. Copies of Directors’ Deeds of Indemnity.
iv. A copy of the Company’s Articles of Association.
Copies of these documents will be available at
theAGM upon request, both online and in person,
from 10am on the morning of the AGM until the
meeting’s conclusion.
13. Shareholders are advised that, unless otherwise
specified, the telephone numbers, website and email
addresses set out in this Notice or proxy forms are
not to be used for the purpose of serving information
or documents on the Company, including in relation
to proceedings at the Company’s AGM.
14. As at 19 May 2026 (the latest practicable date before
the publication of this Notice), the Company’s issued
share capital consists of 2,066,282,763 ordinary
shares carrying one vote each. No shares are held
intreasury. Therefore, the total voting rights in the
Company as at 19 May 2026 are 2,066,282,763.
15. CREST members who wish to appoint a proxy/proxies
through the CREST electronic proxy appointment
service may do so for the AGM and any adjournment
thereof by using the procedures described in the
CREST Manual (available via euroclear.com). CREST
personal members or other CREST-sponsored
members, and those CREST members who have
appointed a service provider, should refer to their
CREST sponsor or voting service provider, who will
be able to take the appropriate action on their behalf.
16. For a proxy appointment or instruction made using
the CREST service to be valid, the appropriate CREST
message (a ‘CREST proxy instruction’) must be
properly authenticated in accordance with Euroclear
UK and International Limited’s specifications and
must contain the information required for such
instruction, as described in the CREST Manual.
Themessage, regardless of whether it constitutes
the appointment of a proxy or is an amendment to
the instruction given to a previously appointed
proxy must, in order to be valid, be transmitted so
as to be received by Equiniti (ID RA19) by 11am on
Friday 3 July 2026. For this purpose, the time of
receipt will be taken to be the time (as determined
by the time stamp applied to the message by the
CREST Application Host) from which Equiniti is able
to retrieve the message by enquiry to CREST in the
manner prescribed by CREST. After this time, any
change of instructions to proxies appointed through
CREST should be communicated to the appointee
through other means.
17. CREST members and, where applicable, their CREST
sponsors or voting service providers should note
that Euroclear UK and International Limited does
not make available special procedures in CREST for
any particular message. Normal system timings and
limitations will therefore apply in relation to the input
of CREST proxy instructions. It is the responsibility
of the CREST member concerned to take (or, if the
CREST member is a CREST personal member, or
sponsored member, or has appointed a voting
service provider, to procure that their CREST
sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure a message is
transmitted by means of the CREST system by any
particular time. In this connection, CREST members
and, where applicable, their CREST sponsors or
voting system providers are referred in particular
tothose sections of the CREST Manual concerning
practical limitations of the CREST system and timings.
18. The Company may treat as invalid a CREST proxy
instruction in the circumstances set out in Regulation
35(5) (a) of the Uncertificated Securities
Regulations2001.
19. If you are an institutional investor, you may be able
to appoint a proxy electronically via the Proxymity
platform, a process which has been agreed by the
Company and approved by the Registrar. For further
information regarding Proxymity, please go to
proxymity.io. Your proxy must be lodged by 11am
onFriday 3 July 2026 in order to be considered valid.
Before you can appoint a proxy via this process you
will need to have agreed to Proxymity’s associated
terms and conditions, which will govern the
electronic appointment of your proxy.
20. Any corporation that is a member can appoint one
or more corporate representatives who may exercise
on its behalf all of its powers as a member, provided
they do not do so in relation to the same shares.
NOTICE OF MEETING
Marks and Spencer Group plc Annual Report and Financial Statements 2026 199
NOTICE OF MEETING CONTINUED
Notes continued
21. Duly appointed proxies or corporate representatives
should contact the Company’s Registrar, Equiniti,
before 11am on Monday 6 July 2026 by emailing
hybrid.help@equiniti.com, for their unique username
and password to join the meeting. Pleaseensure a
valid proxy appointment has been made by no later
than the voting deadline of 11am on Friday 3 July
2026. Mailboxes are monitored 9am to 5pm Monday
to Friday (excluding public holidays in England
andWales).
22. Under Section 527 of the Companies Act 2006,
members meeting the threshold requirements set
out in that section have the right to require the
Company to publish on a website a statement
setting out any matter relating to:
i. the audit of the Company’s accounts (including
the Auditor’s Report and the conduct of the
audit) that are to be laid before the AGM; or
ii. any circumstance connected with an auditor of
the Company ceasing to hold office since the
previous meeting at which annual accounts and
reports were laid in accordance with Section 437
of the Companies Act 2006.
The Company may not require the shareholders
requesting any such website publication to pay its
expenses in complying with Section 527 or 528
ofthe Companies Act 2006. Where the Company
isrequired to place a statement on a website
underSection 527 of the Companies Act 2006,
itmust forward the statement to the Company’s
auditornolater than the time when it makes the
statementavailable on the website. The business
that may be dealt with at the AGM includes any
statement that the Company has been required
topublish on a website under Section 527 of the
Companies Act 2006.
23. Any member joining the meeting has the right to ask
questions. The Company must cause to be answered
any question relating to the business being dealt
with at the meeting but no answer need be given if:
i. to do so would interfere unduly with the
preparation for the meeting or involve the
disclosure of confidential information;
ii. the answer has already been given on a website
in the form of an answer to a question; or
iii. it is undesirable in the interests of the Company
or the good order of the meeting that the
question be answered.
We will not permit behaviour interfering with
anyone’s safety and comfort, or the meeting’s
orderly conduct. Guests will be admitted at the
Company’s discretion.
24. A copy of this Notice, and other information required
by Section 311A of the Companies Act 2006, can be
found at corporate.marksandspencer.com.
NOTICE OF MEETING
Marks and Spencer Group plc Annual Report and Financial Statements 2026200
Analysis of share register
Ordinary shares
As at 28 March 2026, the Company had 105,259 registered holders of ordinary shares.
Their shareholdings are analysed below. It should be noted that many of our private
investors hold their shares through nominee companies; therefore, the actual
number of shares held privately will be higher than indicated below.
Range of shareholding
Number of
shareholders
Percentage
of total
shareholders
Number of
ordinary
shares
Percentage
of issued
share capital
1-500 56,814 53.98 10,350,244 0.50
501-1,000 18,796 17.86 13,978,588 0.68
1,001-2,000 14,646 13.91 20,822,040 1.01
2,001-5,000 10,331 9.81 31,551,648 1.53
5,001-10,000 2,714 2.58 18,553,315 0.90
10,001-100,000 1,399 1.33 33,528,453 1.62
100,001-1,000,000 355 0.34 127,657,742 6.18
1,000,001-Highest 204 0.19 1,809,066,569 87.58
Total 105,259 100 2,065,508,599 100
Category of shareholder
Number of
shareholders
Percentage
of total
shareholders
Number of
ordinary
shares
Percentage
of issued
share capital
Private 103,778 98.59 114,412,664 5.54
Institutional and corporate 1,481 1.41 1,951,095,935 94.46
Total 105,259 100 2,065,508,599 100
Useful contacts
Marks and Spencer Group plc
Registered office
Waterside House, 35 North Wharf Road, London W2 1NW
Telephone: +44 (0)20 7935 4422
Registered in England and Wales (No. 4256886)
General queries
Customer queries: +44 (0)333 014 8555
Shareholder queries: +44 (0)345 609 0810
Or email: chairman@marks-and-spencer.com
Registrar/shareholder queries
Equiniti Limited, Highdown House, Yeoman Way, Worthing, West Sussex BN99 3HH
Telephone: +44 (0)345 609 0810 (please use the country code when contacting from
outside the UK).
Online: help.shareview.co.uk (from here, you will be able to securely email Equiniti
with your enquiry).
Students
Please note, students are advised to source information from our website.
Additional documents
An interactive version of our Annual Report is available online at
corporate.marksandspencer.com/annualreport2026.
Additionally, the Annual Report (which contains the Strategic Report) is available for
download in PDF format at corporate.marksandspencer.com/annualreport2026.
2026/27 financial calendar and key dates
4 June 2026 Ex-dividend date, final dividend
5 June 2026 Record date to be eligible for final dividend
7 July 2026 Annual General Meeting (11am)
10 July 2026 Final dividend payment date
4 November 2026* Half Year Results
†
8 January 2027* Results, Christmas Trading Update
†
† Those who have registered for electronic communication or news alerts at
corporate.marksandspencer.com will receive notification by email when this is available.
* Provisional dates.
SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
Marks and Spencer Group plc Annual Report and Financial Statements 2026 201
SHAREHOLDER INFORMATION CONTINUED
Shareholder queries
The Company’s Share Register is maintained by our Registrar, Equiniti. Shareholders
with queries relating to their shareholding should contact Equiniti directly using one
of the methods listed on pages 191 and 201 or by visiting shareview.co.uk. For more
general queries, shareholders should consult the Investors section of our corporate
website corporate.marksandspencer.com/investors.
Managing your shares online
Shareholders can manage their holdings online by registering with Shareview, a
secure online platform provided by Equiniti. Registration is a straightforward process
and allows shareholders to:
•
Sign up for electronic shareholder communications.
•
Receive trading updates and other electronic-only broadcasts by the Company
viaemail.
•
View all of their shareholdings in one place.
•
Update their records following a change of address.
•
Have dividends paid into their bank account.
•
Vote in advance of the Company’s general meetings.
M&S encourages shareholders to sign up for electronic communications as the Company
has found this creates a more engaged shareholder base. The reduction in printing costs
and paper usage also makes a valuable contribution to our Plan A commitments.
To find out more information about the services offered by Shareview and to register,
please visit shareview.co.uk.
Dividends
Subject to the relevant Board and shareholder approvals, dividends are paid in
January and July each year. Shareholders who receive their dividend payments
directly into their bank accounts will receive an Annual Dividend Confirmation in
January, covering both dividend payments made during the tax year.
Shareholder Panel
Established in 2016, our Shareholder Panel provides an opportunity for private
shareholders to hear more about how we’re reshaping M&S and to share views on the
business. The panel meets two to three times a year, mainly digitally but occasionally
in person. We try to refresh the panel each year so we can provide the opportunity to
as many shareholders as possible.
Applications to be part of the panel for 2026/27 are open; register your interest by
emailing privateshareholders@marks-and-spencer.com before 31 July 2026.
ShareGift
If you have a very small shareholding that is uneconomic to sell, you may want to
consider donating it to ShareGift (registered charity no. 1052686), a charity that
specialises in the donation of small, unwanted shareholdings to good causes.
Youcanfind out more by visiting sharegift.org or by calling +44 (0)20 7930 3737.
Shareholder security
We are aware that some shareholders have received unsolicited and suspicious phone
calls received from purported ‘brokers’ who offer to buy their shares at a price far in
excess of their market value. It is unlikely that firms authorised by the Financial
Conduct Authority (FCA) will contact you with offers like this; these are likely part of
a scam, commonly referred to as a ‘boiler room’. The callers obtain your details from
publicly available sources of information, including the Company’s Share Register,
and can be extremely persistent and persuasive.
Shareholders are cautioned to be wary of any unsolicited advice, offers to buy shares
at a discount, or sell your shares at a premium, or requests to complete confidentiality
agreements with the callers. Remember, if it sounds too good to be true, it probably is!
We encourage shareholders to read the FCA’s guidance on how to avoid scams at
fca.org.uk/consumers/protect-yourself-scams.
AGM
The 2026 AGM will be a digitally-enabled meeting held at, and broadcast from, M&S’
Waterside House Support Centre at 11am on Tuesday 7 July 2026. Shareholders are
invited to engage with the AGM electronically via the Lumi AGM platform, which can
be accessed by logging on to https://meetings.lumiconnect.com/100-348-343-158.
On this website, questions and voting instructions can be submitted both during the
meeting and in advance. Details on how to join the meeting electronically and submit
votes and questions can be found on pages 190 to 192.
If a shareholder wishes to attend in person as part of our studio audience, we ask that
they register their intention to do so in advance, to help manage capacity on the day.
Details of how to register attendance can be found on page 192.
The meeting will also be available to view online after the event at corporate.
marksandspencer.com/investors.
M&S reserves the right to retain and use footage or stills for any purpose, including
Annual Reports, marketing materials and other publications.
SHAREHOLDER INFORMATION
Marks and Spencer Group plc Annual Report and Financial Statements 2026202
INDEX
A Page
Accounting policies 118
Adjusting items 131
Appointment and retirement of directors 93
Audit & Risk Committee Report 60
Auditor 65
Auditor’s remuneration 130
Auditor’s report 99
Annual General Meeting 190
B
Board 51
Borrowing facilities 152
Business model 5
C
Capital commitments 167
Capital expenditure 23
Colleague involvement 96
Conflicts of interest 94
Corporate governance 49
Cost of sales 129
Critical accounting judgements 126
D Page
Deadlines for exercising voting rights 191
Deferred tax 166
Depreciation 122, 146
Derivatives 153
Diluted earnings per share 136
Directors’ indemnities 94
Directors’ interests 87, 91
Directors’ responsibilities 98
Directors’ single figure of remuneration 83
Disclosure of information to auditor 98
Dividend cover 183
Dividend per share 15
E
Earnings per share 136
Employees 25
Employees with disabilities 96
Equal opportunities 96
ESG Committee Report 58
F
Finance income/costs 133
Financial assets 149
Financial instruments 153
Financial liabilities 153
Financial review 16
Fixed charge cover 183
G Page
Glossary of alternative performance measures 184
Going concern 97, 118
Goodwill 144
Groceries Supply Code of Practice 97
H
Hedging reserve 115
I
Income statement 112
Intangible assets 144
Interests in voting rights 96
International Financial Reporting Standards 118
Inventories 123
Investment property 114
K
Key performance indicators 15
L
Lease liabilities 152
N
Nomination Committee Report 56
P
Principal risks and uncertainties 43
Profit and dividends 94
Power to issue shares 95
Political donations 97
INDEX
Marks and Spencer Group plc Annual Report and Financial Statements 2026 203
INDEX CONTINUED
R Page
Risk management 41
Remuneration Policy 71
Remuneration Committee 66
Remuneration Report 81
S
Segmental information 128
Shareholder information 201
Share capital 167
Share schemes 71-80, 84-87
Significant agreements 95
Statement of cash flows 117
Statement of comprehensive income 113
Statement of financial position 114
Strategic progress 10
Subsidiary undertakings 177
T
Taxation 134
Total shareholder return 69, 88
Trade and other payables 151
Trade and other receivables 150
Transfer of securities 95
V
Variation of rights 95
Viability statement 48
Financial statements Page
Consolidated income statement 112
Consolidated statement of comprehensive income 113
Consolidated statement of financial position 114
Consolidated statement of changes in equity 115
Consolidated cash flow statement 117
Note
1 Accounting policies 118
2 Segmental information 128
3 Expense analysis 129
4 Profit before taxation 130
5 Adjusting items 131
6 Finance income/costs 133
7 Income tax expense 134
8 Earnings per share 136
9 Dividends 136
10 Employees 136
11 Retirement benefits 137
12 Marks and Spencer
ScottishLimitedPartnership 141
13 Share-based payments 142
14 Intangible assets 144
15 Property, plant and equipment 146
16 Other financial assets 149
17 Trade and other receivables 150
18 Cash and cash equivalents 150
Note Page
19 Trade and other payables 151
20 Borrowings and other financial liabilities 152
21 Financial instruments 153
22 Provisions 165
23 Deferred tax 166
24 Ordinary share capital 167
25 Contingencies and commitments 167
26 Analysis of cash flows given in the
statementofcashflows 168
27 Analysis of net debt 169
28 Related party transactions 171
29 Business combination 172
30 Contingent assets 172
31 Contingent Liabilities 173
32 Subsequent events 173
Company financial statements 174
Notes to the Company financial statements 176
Group financial record 182
INDEX
Marks and Spencer Group plc Annual Report and Financial Statements 2026204
Marks and Spencer Group plc commitment to environmental
stewardship is reflected in this Annual Report, which has been
printed on Revive 100 Offset, which is 100% post-consumer recycled,
FSC
®
certified and totally chlorine free (TCF) paper. Printed in the UK
by Pureprint Group using vegetable-based inks, with 99% of dry
waste being diverted from landfill. The printer is a CarbonNeutral
®
company. Both the mill and the printer are certified to ISO 14001
(Environmental Management System) and ISO 9001 (Quality
Management System).
Please recycle.
Produced by Design Portfolio
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Read the report online at corporate.marksandspencer.com/annualreport2026
Marks and Spencer Group plc Annual Report and Financial Statements 2026