M&S’s profits were almost wiped out after it was hit by a cyber-attack which left shoppers unable to buy online from the company for months.
The hack was “an extraordinary moment in time,” it said, as it revealed statutory profit before tax – a figure that reflects all costs for a period – slumped 99% from £391.9m to £3.4m for the first half of the year, compared with the year prior.
As well as disrupting its online business, the hack affected M&S in-store too, leaving some shelves bare in the weeks after it was targeted.
M&S’s boss said profits should recover in the key Christmas period, but warned a later Budget and chancellor’s speech on Tuesday had not inspired confidence in UK shoppers.
In its latest results, M&S said it had received £100m of insurance money related to combating the cyber-attack, around the amount which the incident had cost it so far, though it expects further costs in the coming months.
In another measure of profit which strips out some costs from unusual events, it made £184m for the first half of the year, compared with £413m the year prior.
The fashion and food company was forced to suspend online orders for almost two months, with click and collect suspended for almost four months.
Revealing its financial figures for the six months to September, M&S said “the underlying strength” of the chain meant it was “getting back on track” and expected full-year profits to be in-line with last year.
One analyst told BBC’s Today programme that it was reassuring that the main part of M&S’s business, homewares and fashion, only saw sales decline around 16%.
“Given that they were offline for most of the trading period and really only came back online for their click and collect in August, it’s pretty, pretty resilient,” said Judith MacKenzie, head of Downing Fund Managers.
She said it was “outstanding” that its food sales were up 7.8% over that time despite it being “a pretty horrendous period” for the company.
M&S had earlier estimated that the attack would cost it around £300m.
On a call after the results, Mr Machin said: “in May, we anticipated the material impact of the incident on group operating profit to be around £300m this financial year, and we are broadly in line with that”.
He said there were costs from managing the impact, including more IT staffing, and increased food wastage as the firm switched to manual processing during the cyber attack.
Ms Rumbold said there was a view from investors that the disruption caused by the hack “was a one-off”.
“Normal trading can therefore resume and the positive story M&S had going prior to the cyber-attack remains in place.”
M&S said in the second half of the year it forecast profits would recover to the levels seen in 2024, “as the residual effects of the incident continue to reduce in the coming months.”
Mr Machin said the firm was looking forward to a profitable Christmas period, and said sales were going well of its much-loved rose mulled wine, and men’s washable tuxedos.
While profits at M&S tumbled, other retailers have seen a boost in sales as people turned to them for shopping after the cyber attack.
Next continued to see sales overperform, with its latest results in October seeing a 10.5% increase in sales. However, that was not as good as earlier in the year when it had seen “exceptional performance” in the immediate aftermath of the M&S cyber attack.
Credit: Source link
