M&S profits halve after cyber attack, but recovery 'on track'

Marks & Spencer (M&S) has reported a sharp fall in half-year profits after a major cyber incident disrupted trading earlier this year, but said the business is now “regaining momentum”.

For the 26 weeks to 27 September, adjusted pre-tax profit fell 55% to £184.1m in the 26 weeks to 27 September, down from £413.1m a year ago.

Statutory profit before tax dropped to £3.4m, reflecting the cost of restoring systems and temporary disruption across both its food and fashion operations.

Group sales, however, rose 22% to £7.96bn, supported by solid growth in food and the consolidation of its Ocado Retail joint venture.

Food sales climbed 7.8%, marking a 37th consecutive month of volume growth, but its Fashion, & Beauty division fared less well, experiencing sales fall 16.4% as online operations were paused during the recovery period.

International sales also fell 11.6%, with trading in major markets impacted by shipment delays.

Chief executive Stuart Machin described the period as “an extraordinary moment in time” for the high street retailer but said M&S’s underlying strength had allowed it to “face into the challenge and deal with it”.

“We are now getting back on track,” Machin said. “Change is constant, and that’s why we remain resolute in reshaping M&S for growth.”

The retailer reported recovery efforts are taking hold with its transformation plan ramping up. In particular, M&S increased investment in its store renewal and logistics programme, opening 15 new or renewed stores in the half and planning more than 20 in the second.

It also confirmed a £340m investment in a new automated food distribution centre at Daventry, part of a plan to modernise its supply chain and cut costs.

Machin said the food business was “largely recovered”, with waste and markdowns returning to normal levels, while fashion operations were also improving following the restoration of online systems in August.

Looking ahead, despite cost pressures – including over £50m in new taxes and levies – M&S said it expected full-year profit to be at least in line with last year, with a “springboard” into the financial year.

Machin added that while M&S had made “meaningful progress”, there remained “so much more to do and so much opportunity ahead of us”. “It’s all to play for,” he said.

In July, the National Crime Agency confirmed four people had been arrested in relation to the high-profile cyber attacks that severely disrupted operations at M&S, Co-op and Harrods earlier this year.

Marks & Spencer (M&S) has reported a sharp fall in half-year profits after a major cyber incident disrupted trading earlier this year, but said the business is now “regaining momentum”.

For the 26 weeks to 27 September, adjusted pre-tax profit fell 55% to £184.1m in the 26 weeks to 27 September, down from £413.1m a year ago.

Statutory profit before tax dropped to £3.4m, reflecting the cost of restoring systems and temporary disruption across both its food and fashion operations.

Group sales, however, rose 22% to £7.96bn, supported by solid growth in food and the consolidation of its Ocado Retail joint venture.

Food sales climbed 7.8%, marking a 37th consecutive month of volume growth, but its Fashion, & Beauty division fared less well, experiencing sales fall 16.4% as online operations were paused during the recovery period.

International sales also fell 11.6%, with trading in major markets impacted by shipment delays.

Chief executive Stuart Machin described the period as “an extraordinary moment in time” for the high street retailer but said M&S’s underlying strength had allowed it to “face into the challenge and deal with it”.

“We are now getting back on track,” Machin said. “Change is constant, and that’s why we remain resolute in reshaping M&S for growth.”

The retailer reported recovery efforts are taking hold with its transformation plan ramping up. In particular, M&S increased investment in its store renewal and logistics programme, opening 15 new or renewed stores in the half and planning more than 20 in the second.

It also confirmed a £340m investment in a new automated food distribution centre at Daventry, part of a plan to modernise its supply chain and cut costs.

Machin said the food business was “largely recovered”, with waste and markdowns returning to normal levels, while fashion operations were also improving following the restoration of online systems in August.

Looking ahead, despite cost pressures – including over £50m in new taxes and levies – M&S said it expected full-year profit to be at least in line with last year, with a “springboard” into the financial year.

Machin added that while M&S had made “meaningful progress”, there remained “so much more to do and so much opportunity ahead of us”. “It’s all to play for,” he said.

In July, the National Crime Agency confirmed four people had been arrested in relation to the high-profile cyber attacks that severely disrupted operations at M&S, Co-op and Harrods earlier this year.