Marks & Spencer: Rotation, Rotation, Rotation. Part 3 - Show me the money

Research evidence excerpt

Marks & Spencer: Rotation, Rotation, Rotation. Part 3 - Show me the money

market value (even where the market value exceeded

the book value). In practice the Company would not choose to close stores that were part of its future store estate strategy

where an alternative site was not available. This meant that two types of scheme were possible: (1) closing stores M&S did not

wish to trade and selling the site for an alternative use, and (2) redeveloping a site to include a new M&S store as well as an

alternative use (e.g. hotel or offices).

In practice these restrictions limited M&S to a small number of schemes in vibrant town centres. Of the schemes mentioned

by the Company (Sauchiehall Street, Hammersmith and Marble Arch), Sauchiehall Street was successfully sold in 2024 for

student accommodation, a consultation began on Hammersmith in 2022 but appears to have been abandoned, and Marble

Arch faced significant planning delays (below). The old Birmingham store (closed in 2023 to relocate) was sold in 2025 (article

here) to build a 50-storey residential tower. These delays have been partially offset by disposal of warehouses in FY21/22

and FY24/25. Reflecting the difficulty and small number of these schemes, the business guides to £40m disposal income

for FY26/27. We expect this rate to continue in forecast years. Despite the difficulty of these schemes, our confidence is

underpinned by the out-sized benefit we expect from just one scheme: Marble Arch.

Although sale and leaseback has been a common tool in retail, it is less appealing to Marks & Spencer. The creation of a lease

liability counteracts the Company’s recent focus on reducing its net debt and regaining (and retaining) its investment grade

credit rating.