M&S Targets Near-50% Online Penetration in Growth Push

Marks & Spencer wants online sales to reach close to half of its Fashion, Home & Beauty revenue, supported by an estate of 180 "highly productive" stores. The retailer set out the target at its Capital Markets Day, outlining the next phase of its Reinvesting for Growth transformation.

The division will aim for operating margins above 10% across both stores and online, while continuing to gain market share. That bar is not yet cleared. Online penetration reached 35% of Fashion, Home & Beauty sales in the first half, up from 33% in 2024/25.

What did the group-level targets contain?

M&S is targeting mid-to-high single-digit sales growth over the medium term, with profit growing faster than sales. Its Food division aims to double sales over time at an operating margin of around 5%. International growth will run through capital-light routes, including an expanded partnership with Zalando's ZEOS (the German platform's fulfilment and logistics arm for brands), now covering 22 continental European markets. The retailer reiterated it remains on track to deliver £600 million in structural cost reductions by FY28.

How solid is the starting position?

The targets follow interim results for the 26 weeks to 26 September. Fashion, Home & Beauty sales rose 17.5% to £1,995.4 million as the business recovered from last year's cyber attack. Adjusted operating profit increased to £150.5 million, a 7.5% margin. Both figures sat below 2024/25 levels, when the division posted a 12% operating margin. Store sales ran 5.2% below the level of two years earlier, which M&S attributed to availability issues and the prolonged summer heat. Group adjusted pre-tax profit rose to £403.2 million, against £184.1 million a year earlier. The gap between a 7.5% half-year margin and a 10%-plus ambition is the number supply-chain and sourcing teams will be measured against.

Chief Executive Stuart Machin said: "We are resetting the backbone of the business, from sourcing to supply chain, merchandise planning, stores and online. Although we have much-improved product, the end-to-end transformation is still in its early stages." The caveat in his own words matters: improved product has not yet translated into restored margins.

What is being built, and when?

Two infrastructure commitments carry firm dates:

• An automated fashion distribution centre in Lichfield is scheduled to open in 2027.
• Sephora will launch on M&S's online platform and in selected stores from spring 2027.

The renewed Pantheon flagship store on Oxford Street serves as the blueprint for future investment in Fashion, Home & Beauty. Sales across its fashion, home and beauty departments have increased by 27% versus 2024/25 since it reopened. One flagship outperforming a weak estate baseline is not proof the format scales; M&S has not disclosed the store's absolute sales.

Does the Christmas campaign signal anything for channels?

M&S launched its Christmas campaign, The Home of Christmas, on 6 November — the retailer's first since 2017 to cover all four categories. James Norton stars as an undercover Santa, and the Pantheon flagship will showcase the full festive offering under one roof. Sharry Cramond, Fashion, Home & Beauty Marketing Director, said: "Customers don't think about Christmas as one meal, one gift or one outfit. They think about all of the moments that make the season special." The integrated campaign signals how M&S intends to run food and general merchandise as one customer proposition rather than parallel businesses.

The distribution centre and Sephora rollout in 2027, alongside the FY28 cost-reduction deadline, give sourcing and logistics partners a clear window for when M&S expects its operating model to change; whether the 10% margin target survives contact with that timeline will be the test of this Capital Markets Day.