M&S Food Sales Accelerate with Ocado and Automation Push
Marks & Spencer's food division reported a 13.9% sales rise to £5.2bn, driven by Ocado growth and volume increases.
Marks & Spencer's food sales grew 13.9 per cent to £5.2 billion in the six months to September 26. This surge was powered by double-digit volume growth and a 22.8 per cent increase in sales through its Ocado Retail venture.
Food volumes increased 11.9 per cent, with M&S products now accounting for 30.9 per cent of the average Ocado basket. Adjusted operating profit for the division reached £288.6 million, delivering a 5.6 per cent margin. Since 2021/22, the company's food sales have risen by more than 50 per cent.
Chief Executive Stuart Machin noted the division's outperformance. "Our Food business is ahead, delivering double-digit volume growth in a flat market," he said.
Strategic Investment in Automation
To support future expansion, M&S is making a major £340 million investment in supply chain automation. Construction began in May on a new 1.3 million sq ft automated food distribution centre in Northamptonshire.
The facility is scheduled to open in 2029 and will serve more than 200 M&S Food stores. The system will use pallet cranes, high-speed shuttles and hands-free picking technology. This investment is designed to increase capacity, improve product availability and reduce long-term operating costs. Changes to delivery and replenishment processes are also intended to free store staff to focus more on customer service.
Supporting this infrastructure is advanced forecasting technology. The RELEX system, which covers 1050 stores and 13 distribution centres across the UK and Ireland, uses sales history, weather data, promotions and pricing to predict demand and manage stock levels.
Financial Targets and Outlook
The company has set clear financial targets for its food business. M&S aims to achieve annual sales growth in the mid-to-high single digits over the medium term, with profit growth outpacing sales increases. A key goal is reaching an operating margin of around five per cent for the food division.
| Financial Target | Detail |
|---|---|
| Sales Growth | Mid-to-high single digits annually (medium term) |
| Food Operating Margin Target | Around 5% |
| Planned Full-Year Dividend for 2026/27 | 8.4p per share |
| Previous Full-Year Dividend | 4.2p per share |
The retailer expects to generate free cash flow in each of the next three years. As part of its Reinvesting for Growth transformation agenda, M&S plans to double its full-year dividend for 2026/27 to 8.4p a share from 4.2p. Thereafter, dividends are intended to grow at least in line with earnings over time.
