Following a well-attended investor call with Marks and Spencer Group PLC's (LSE:MKS) chairman, Archie Norman, analysts at RBC Capital Markets reaffirmed their positive stance on the retailer.
The update from Norman came amid ongoing challenges following a cyberattack earlier this year, which is expected to impact full-year profits by around £300 million, mainly due to food waste and lost online sales in the fashion division.
RBC, which reiterated an 'outperform' rating on the retailer with a price target of 400p, down slightly from 420p, believes the impact on Marks' growth this year is temporary and the company’s long-term fundamentals remain strong.
The UK consumer outlook is broadly favourable, with shoppers increasingly seeking quality and value for money, areas where M&S has a solid position.
Its food business, which accounts for around 60% of sales, continues to benefit from innovation and a strong premium offering, helping to offset more aggressive pricing by competitors like Asda.
The analysts reckon the Clothing & Home division also shows potential for margin improvement, particularly online, where operating margins remain below in-store levels.
The retailer is investing in supply chain upgrades and improving delivery efficiency to boost profitability. The arrival of new operations leadership is expected to accelerate these efforts, the RBC team noted.
Internationally, M&S faces challenges with its franchise partners, but the group is exploring a royalty-based model to improve partner incentives and reduce stock levels, the bank added.
The company’s joint venture with Ocado continues to support its online food offering, despite some profitability pressure.
RBC's earnings forecasts were trimmed modestly for 2026 and 2027 due to cautious assumptions on food waste and clothing discounting.
However, the analysts said the shares trade at a reasonable 11x forecast earnings per share for 2026, reflecting a valuation that assumes steady recovery.
The shares were flat at 330.3p on Wednesday.