Marks & Spencer (LON: MKS) hosted its Capital Markets Day in London this week, outlining its plans for growth and efficiency. Following the event, Citi analysts shared five key takeaways:
Capital Expenditure Guidance: The bank noted that Marks & Spencer announced mid-term capital expenditure guidance of £500-£600 million, with 40% allocated to maintenance and 60% to growth projects. For FY25, the retailer forecasts capex of around £500 million, in line with Citi’s estimate of £525 million and the consensus of £532 million.
Margin Targets: The company reaffirmed its margin targets of over 4% for Food and over 10% for Clothing & Home (C&H). Citi projects margins of 5.3% and 11.0%, respectively, for FY25, demonstrating its confidence in profitability despite prioritising reinvestment to improve product availability.
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Cost-Saving Ambitions: Citi said M&S is on track to achieve its £500 million savings target by FY28, with £240 million already delivered 1.5 years into its five-year plan. Further efficiencies are expected through measures such as implementing electronic shelf-edge labels and RFID technology.
Food Value Perception: The retailer is said to have acknowledged that its value perception in Food remains below expectations. M&S is reluctant to raise prices to offset inflation, citing a £60 million impact from the National Insurance increase.
International Reset: With performance outside the Republic of Ireland flat for eight years, Citi said M&S has appointed Mark Lemming as International Managing Director to lead a strategic overhaul.
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