Marks & Spencer has revealed the full financial damage caused by a major cyberattack that crippled its operations earlier this year, sending pre-tax profit plunging 99 per cent and stalling recovery in its clothing and home division. The FTSE 100 retailer said the breach will knock £136 million off annual profit as it continues to rebuild and overhaul its systems.
The company disclosed that it would take a £101.6 million charge in the first half of the year and a further £34 million in the second, tied to technology and warehouse system repairs following the April attack that forced it to shut down both online and in-store systems temporarily. Marks & Spencer said it had claimed £100 million under its cyber insurance policy but had still forecast a total £300 million hit to profits this financial year.
For the six months to the end of September, pre-tax profit fell to £3.4 million from £391.9 million a year earlier, while underlying pre-tax profit dropped 55 per cent to £184.1 million. The company said lower online sales, supply disruptions, and heavy discounting were the main factors behind the collapse.
Sales in the clothing, home, and beauty division slumped by 16.4 per cent, with profit plunging 80 per cent to £46.1 million. Online sales tumbled 42.9 per cent as stock availability suffered, while in-store sales declined 3.4 per cent, largely due to the temporary loss of click-and-collect services. Margins in the division dropped sharply from 12 per cent to just 2.7 per cent.
The food business proved more resilient, with sales up 7.8 per cent, only slightly slower than last year’s 8.1 per cent growth. However, operating profit there fell nearly 60 per cent to £58.8 million as discounting, waste, and manual stock management took their toll. Marks & Spencer said the food arm has now “largely recovered,” though progress in fashion and home “has been slower” due to the complexity of rebuilding systems and restoring stock flow.
Despite the disruption, group revenue rose 22.1 per cent to £7.96 billion, although international sales slipped 11.6 per cent. Chief executive Stuart Machin described the first half as “an extraordinary moment in time for M&S,” adding that the retailer’s financial strength had allowed it to “face the challenge and deal with it.” He said the company expects profits in the second half of the year to return to at least last year’s levels.
Marks & Spencer, which has been undergoing a years-long turnaround, is now focused on the critical Christmas trading period, which typically delivers the bulk of its profits. To cushion against rising costs and inflationary pressures, the retailer said it had expanded its cost-cutting programme from £500 million to £600 million. It also cited more than £50 million in extra expenses from the government’s new packaging levy and higher national insurance contributions.
M&S shares closed down 1.29 per cent, or 5p, at 380p following the announcement.
