Why Watch Marks & Spencer Shares Still Have Upside Potential

Marks & Spencer (LON: MKS) remains one of Hargreaves Lansdown’s five shares to watch in 2026, with the firm’s mid-year review noting that the retailer’s full-year results confirmed the scale of last year’s cyber disruption while showing why the recovery story “hasn’t gone away.”

Analyst Aarin Chiekrie wrote that M&S sales rose 25% to £17.4 billion, or 2% to £14.2 billion excluding the consolidation of Ocado Retail. Food remained the standout performer, with sales up 7% as value initiatives helped the group gain market share and attract more families for their weekly shop.

However, this growth is said to be largely offset by declines in the Fashion, Home & Beauty segment, which was hardest hit by the cyber-attack, disrupting online trading and leading to steep discounting to clear old stock. As a result, full-year underlying pre-tax profits fell 24% to £671 million.

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Within Fashion, Home & Beauty, Hargreaves Lansdown noted that customer perceptions around value, quality and style are improving, though “the online journey and margins in this division simply are not as good as the competition.”

The firm added that big investments are being made to address this, which could deliver “a strong uplift in profitability” if successful.

Hargreaves Lansdown added that “the rationale for including M&S on the list still stacks up, but execution is now everything.”

The firm noted the valuation sits at a discount to peers, with upside potential if the transformation stays on track, but cautioned that competition is fierce, “leaving little margin for error,” and there’s no guarantee operations will recover on management’s timeline.