Marks and Spencer Group PLC

Ocado has dropped its pursuit of a £190 million payment from Marks & Spencer tied to their online grocery joint venture. The final instalment of £190.7 million was contingent on Ocado Retail meeting undisclosed performance targets in the year to November 2023, which it failed to do. Ocado had previously threatened legal action, with chief executive Tim Steiner arguing that factors such as the pandemic should have been considered. The two parties have now decided to draw a line under the dispute, resulting in no payment being made. However, M&S has reportedly refused to commit to new warehouses or increased volumes unless Ocado agrees to improved commercial terms.

Marks & Spencer will set out plans this year to increase shareholder returns in the coming years, according to CFO Alison Dolan. Speaking at the annual shareholders' meeting, Dolan said the retailer's robust balance sheet, net funds position, and strong investment-grade credit rating would enable investment alongside higher shareholder returns. M&S finished its 2025/2026 financial year with net funds of £338.2 million, excluding lease liabilities, and plans capital expenditure of £650 million to £750 million for 2026/2027, with around two-thirds allocated to long-term growth in its food business. The company expects a return to profit growth this year after a 23.8% decline caused by a cyberattack, and it increased its full-year dividend by 16.7%. Chairman Archie Norman said the business entered the new financial year in 'fighting fit form', aiming for consistently high single-digit revenue growth and double-digit profit growth.

Marks and Spencer Group's fair value estimate has been revised up to £4.31 from £4.27, reflecting mixed analyst price targets that range from about £3.90 to the high £4.30s and £4.40 area. Morgan Stanley initiated coverage with an Overweight rating and a £4.39 price target, while Bernstein started with an Outperform rating and a £4.40 target. In contrast, Citi lowered its price target to £3.90 from £4.10, highlighting ongoing debate around execution and the recovery story. The fair value update incorporates a revenue growth assumption of 6.31%, a net profit margin of 3.62%, a future P/E multiple of 15.28x, and a discount rate of 7.89%.