Marks And Spencer Share Price: Remarkable Comeback Likely And Possible

Core Viewpoint - Marks and Spencer's share price has experienced a decline of 14.3% following a cyber attack, despite having a strong financial year in FY25, indicating potential for recovery in the medium term [2][3][8]. Financial Performance - Statutory revenue increased by 6.0% to £13.82 billion, driven primarily by Food sales which rose 8.7% to £9.02 billion, while Fashion, Home, and Beauty (FHB) grew by 3.5% to £4.24 billion [4]. - Adjusted EBIT grew by 17.4% to £985 million, with an adjusted EBIT margin expansion of 68 basis points to 7.08%, supported by structural cost reductions of approximately £120 million [5]. - Adjusted profit before tax (PBT) rose by 22.3% to £876 million, with adjusted diluted EPS increasing by 31.3% to 30.6p and dividends per share (DPS) up by 20.0% to 3.6p [6]. Cyber Attack Impact - The cyber incident is expected to result in a £300 million hit to EBIT for FY26, primarily affecting the first half of the fiscal year, compounded by £120 million in labor cost increases due to higher minimum wage and national insurance [8]. - Despite the short-term challenges, the medium-term investment case remains strong, with anticipated cumulative cost savings of £200 million through FY28 [9]. Market Position and Growth Prospects - M&S Food has become the seventh-largest food and beverage grocer in Britain, holding a 5.1% market share, which positions the company well for future growth [9]. - The FHB segment is expected to grow its online market share from 34.0% to 50.0%, with improvements in online margins anticipated due to supply chain enhancements [10]. - International operations are expected to recover gradually, aided by a capital-light model and new wholesale partnerships [11]. Joint Venture with Ocado - The joint venture with Ocado showed significant progress, with M&S's share of adjusted attributable profit increasing by 23.1% to -£29 million, and revenue rising by 25.2% to £3.09 billion [4][12]. - Profitability for the JV is projected by FY28, contingent on maintaining current momentum and improved synergies following M&S's technical control of the JV [12]. Future Outlook - The company anticipates that Food will be the main growth driver in the upcoming year, although margins may be pressured by the cyber incident and rising labor costs [14]. - Going into FY27, Food growth is expected to slow as grocery inflation eases, but this will be offset by market share gains and a rebound in FHB and International segments [15]. - The stock is currently trading at a low PEG of 1.0, below its 5-year sector average, with a fair value target of 395p for the share price [17].