Marks & Spencer accelerated investments in artificial intelligence, digital commerce, omnichannel retail infrastructure, supply chain automation, and technology modernization during FY2026 as the retailer continued its large-scale transformation strategy despite disruption from a major cyber incident earlier in the year.
The retailer reported group sales of £17.37 billion during FY2026, representing growth of 24.8 percent year-over-year, while statutory revenue increased 25 percent to £17.27 billion following consolidation of Ocado Retail operations. Adjusted profit before tax reached £671.4 million compared with £881.1 million in the previous year.
Marks & Spencer said digital transformation and technology infrastructure remain central to its long-term growth strategy. The company announced future-ready capital expenditure guidance of approximately £650 million-£750 million for FY2027, including around £140 million specifically allocated toward Digital & Technology initiatives.
Investments are being directed toward online platforms, planning systems, warehouse management systems, automation technologies, supply chain modernization, and e-commerce infrastructure designed to improve operational efficiency and customer experience.
Marks & Spencer emphasized that omnichannel commerce remains a major growth priority as the retailer integrates stores, mobile platforms, fulfillment operations, logistics networks, and digital shopping experiences into a unified retail ecosystem. The company said investments are focused on resilient digital infrastructure, automation capabilities, data platforms, and customer-facing technology services.
Investment in artificial intelligence has become important within the retailer’s transformation strategy. Marks & Spencer said AI is now being deployed selectively across operations where it can reduce costs, improve decision-making, optimize pricing, reduce waste, and enhance personalized customer offers.
The retailer is accelerating rollout of generative AI and agentic AI technologies across the organization. Recent initiatives include deployment of AI-powered tools to approximately 11,000 employees, including store managers and operational teams, to automate repetitive tasks, improve workforce planning, streamline reporting, and enhance customer service delivery. The rollout includes Microsoft 365 Copilot integration and broader AI-driven productivity programs.
Marks & Spencer restarted investments during the second half of FY2026 in its fashion planning platform, food warehouse management systems, and e-commerce platform modernization programs after recovery from the cyber incident. Management said the next phase of transformation will prioritize simplifying the technology estate while accelerating online growth and digital operational efficiency.
The retailer relaunched its Sparks loyalty platform with wallet-based rewards aimed at improving personalization, customer engagement, and digital loyalty experiences across physical and online channels. Marks & Spencer said the upgraded Sparks ecosystem will support data-driven marketing, repeat purchases, and personalized omnichannel customer engagement.
Fashion, Home & Beauty remains central to M&S’ online growth ambitions. The retailer aims to double online sales and increase online participation to 50 percent over the medium term. Near-term digital improvements are focused on search, imagery, checkout, and payment systems, while broader e-commerce modernization is expected to improve platform agility and customer experiences.
Online sales in Fashion, Home & Beauty declined 18.4 percent to £1.17 billion during FY2026 following temporary online disruption linked to the cyber incident. However, website traffic and transaction volumes improved during the second half of the year as systems stabilized. Store sales declined 2.3 percent to £2.75 billion, while total Fashion, Home & Beauty sales decreased 7.7 percent to £3.92 billion.
Digital and Technology costs within Fashion, Home & Beauty increased due to systems development, planning platform rollout, online capability upgrades, and the relaunch of Sparks.
Supply chain automation and logistics modernization remain major priorities within the transformation strategy. Marks & Spencer announced investment in a 437,000 square foot automated distribution centre in Lichfield designed to expand online fulfillment capacity, reduce split shipments, accelerate order processing, improve customer service, and lower operating costs. The facility is expected to begin fulfilling customer orders in 2027.
Additional automated sortation capacity at Castle Donington and expanded boxed storage facilities at Bradford are also being introduced as part of the retailer’s fulfillment modernization program.
Food operations also continue benefiting from technology-enabled supply chain investments. M&S said automation, warehouse modernization, and logistics optimization programs are being expanded to support long-term volume growth while lowering operating costs. Investment during FY2027 will focus on the Avonmouth regional distribution centre and the Daventry national distribution centre.
Ocado Retail, the online grocery joint venture between M&S and Ocado Group, delivered strong digital commerce growth during FY2026. Ocado.com active customers increased 10.6 percent to 1.302 million, while average weekly orders rose 12 percent to 521,000. Average basket value increased 1.9 percent to £124.64, while average selling price rose 2.2 percent to £2.83.
Ocado Retail sales increased 15 percent to £3.25 billion, while operating profit improved to £14.7 million from a loss of £20.4 million in the previous year. M&S products sold through Ocado.com increased 17.7 percent to more than £1 billion during the year, supported by stronger customer acquisition, retention, and higher shopping frequency.
International digital commerce also expanded through online marketplace partnerships. Marks & Spencer said online sales are growing through marketplaces including Zalando in Europe, while customer fulfillment operations are transitioning to Zeos to improve service quality, inventory availability, and operating efficiency.
The retailer said digital transformation efforts are strengthening technology resilience and cybersecurity following the operational disruption earlier in FY2026. Incident-related costs totaled £131.3 million, including £109.3 million related to systems response and recovery operations.
Marks & Spencer added that structural cost reduction initiatives remain a major contributor to long-term profitability improvement. The company said structural cost reduction programs are targeting £600 million in savings between FY2023 and FY2028 through automation, digital process optimization, workforce productivity improvements, and technology modernization.
Digital and technology capital expenditure during FY2026 totaled £40.2 million, supporting investments in Sparks, online capabilities, planning systems, and store technology infrastructure. Total M&S capital expenditure before disposals increased to £657.1 million from £578.2 million last year, reflecting accelerated investment in new stores, automation, logistics modernization, and digital infrastructure.
RAJANI BABURAJAN
