FY25 results show the benefit of continued management action with LfL sales growth of c.4% and adj. EBIT +56%, a touch ahead of recently upgraded market expectations, with progress visible across all divisions. Post disposals/closures, the group operating margin is 7.6%, nicely ahead of expectations (SCMe 7.1%). Looking ahead, the outlook statement reinforces confidence in further margin progression and sustainable growth. The shares have been on a strong run of late, but we see scope for further upside as confidence builds in the growth and earnings potential of the reshaped business. Over the next 3 years, our forecasts translate to an adj. PBT CAGR of 18%, a compelling rate of growth which shows the group’s growth potential now that it has moved beyond the turnaround phase, with scope for upside. We increase our TP from 585p to 640p to reflect the broader sector re-rating and group margin progression.
