M&S signals higher shareholder returns

Marks & Spencer has told shareholders at its annual general meeting on 7 July that it expects to increase capital returns in the coming years, even as it commits to higher investment spending on its food-led growth strategy.

Chief Financial Officer Alison Dolan made the commitment, citing a robust balance sheet, a net funds position - meaning the company holds more cash than it has debt - and an investment-grade credit rating, which means that lenders deem the company to be a reliable borrower.

"What that will mean is that over the coming years we will be in the position both to invest and to increase what we return to shareholders," Dolan said. 

She added that M&S expected to set out more detail on its shareholder-return policy, as well as the timing of future returns, over the course of the current 2026/27 financial year.

M&S finished its 2025/26 financial year with net funds excluding lease liabilities of £338.2 million. The board is proposing a full-year dividend of 4.2p per share, a 16.7% increase on the prior year, following a final dividend of 3.0p.

Planned capital expenditure for 2026/27 sits at £650 million to £750 million, with roughly two-thirds directed towards Food, which M&S describes as its fastest-growing and highest-returning division.

The AGM also sought authority for a share buyback of up to 10% of issued share capital, though M&S said it had no present intention of using it.

Archie Norman, Chairman of M&S, added that technology represents a key opportunity for the retailer and is an area in which the company is looking to invest further capital.

"Getting the right product from the manufacturers, forecasting the right way, flowing it through our supply chain into the stores at the right time can deliver great benefits in terms of sales but also in terms of reducing clearance and wastage," Norman said.

"In fashion, home and beauty, we have the chance to rebuild a supply chain based on automation and to flow product from our factories through the stores much, much more efficiently.

"That does require some chunky investment, so it is a big commitment from shareholders, but it will deliver great returns for us," he added.

Cyberattack weighs on profit

The shareholder-return message comes after a year disrupted by a cyberattack that weighed on trading. Adjusted pre-tax profit fell 23.8% to £671.4 million, while statutory profit before tax dropped 28.8% to £364.6 million.

In its annual report, the company said it had the capacity to deliver "attractive compound growth in earnings per share and free cash flow", describing its current dividend stance as conservative because of the investment phase.

Norman told investors the business had begun the new financial year in "fighting fit form".

"We'd like to be a business that delivers consistently high single-digit revenue growth and double-digit profit growth," he said.

M&S shares have risen 16% so far this year. The next catalyst for investors will be the fuller capital-return policy Dolan said the company expects to set out before March 2027.