Image source: Getty Images
2025 hasn’t been a stellar 12 months for the Marks and Spencer (LSE: MKS) share price. The stock has fallen from 376p to 316p, turning a £5,000 investment at the start of the year into around £4,200 (note that investors would have also received/been entitled to 3.8p per share in dividends).
So, what has gone wrong here? And more importantly, can the Footsie stock perform better in 2026 and beyond?
Why has the stock fallen?
There are a few things that have hurt Marks and Spencer shares in 2025. One major factor has been the cyberattack earlier in the year.
This originally occurred back in April. Yet months later, the company was still trying to sort out its systems.
Online clothing orders were suspended for nearly two months while Click & Collect services were unavailable for almost four. Clothing and food availability in stores was also impacted.
The impact on profits has been material. For the six-month period ended 30 September (H1 of FY26), the group posted an adjusted profit before tax of £184m versus £413m in the prior-year period.
Another factor behind the share price weakness has probably been Tesco’s resurgence this year. It has performed well and captured market share from rivals.
The outlook for 2026
Can the stock return to form in 2026? I think so.
I continue to believe that Marks and Spencer has a market-leading offering in terms of food (its food sales rose 7.8% year on year in H1). It also has a pretty solid offering in clothing these days, offering high-quality basics/essentials and trend-led pieces at really good prices.
Meanwhile, with a slightly more affluent customer base, it should be protected from a UK consumer spending squeeze. So, assuming there are no more cyberattack issues, the company should see performance pick up.
It’s worth noting that in the H1 results, it said that it expects profit for H2 to be at least in line with last year. It believes that this will give it a “springboard” into the new financial year and set the company up for further growth.
“Our plan to reshape M&S for long-term sustainable growth is unchanged, our ambitions are undimmed, and our determination to knuckle down and deliver is stronger than ever.”
Marks and Spencer CEO Stuart Machin
Looking further out, analysts expect earnings for the year starting April 2026 (FY27) to be roughly 44% higher than earnings in the current financial year. So, they clearly believe the company can get back on track.
At present, the consensus earnings forecast for FY27 is 33.8p. That puts the stock on a price-to-earnings (P/E) ratio of just nine (compared to 14 for Tesco), meaning that it is pretty cheap today.
An attractive opportunity going into 2026?
Of course, there are risks that could derail the recovery here. These include further cyberattack problems and higher costs.
But overall, I think the set-up looks pretty good right now. At the current share price, I believe the stock is worth a closer look.
