M&S ‘getting back on track’ after cyber attack impacts profit
M&S has announced that it is getting back on track as its first half results reveal the impact of the cyber attack earlier this year and the cost of recovery.
In the six months to 27 September, the retailer’s group adjusted pre-tax profit was £184.1 million compared to £413.1 million a year earlier.
Meanwhile, pre-tax profit collapsed with a decline of 99.1% to £3.4 million.
The cyber attack meant that M&S was hit by both lower online sales, increased stock management costs in fashion, home & beauty, and higher markdown and waste in its food division.
Subscribe to TRBThis impact was partially offset by insurance proceeds related to the incident, which are recognised as insurance income rather than within divisional profits.
Profit was also affected by over £50 million in additional costs arising from the new Extended Producer Responsibility packaging levy and higher national insurance contributions.
Fashion, home & beauty sales declined by 16.4%, reflecting the temporary suspension of online operations from late April to early June, followed by a gradual recovery over the summer. Store sales were affected by reduced product availability and lower footfall resulting from the temporary absence of click and collect services.
M&S said food sales have now largely recovered and rose by 7.8% in the period as customer numbers continue to grow.
Stuart Machin, M&S chief executive, said: “The first half of this year was an extraordinary moment in time for M&S. However, the underlying strength of our business and robust financial foundations gave us the resilience to face into the challenge and deal with it. We are now getting back on track.”
Since the cyber attack, M&S has prioritised recovery across its technology estate and restoring operations. The retailer said nearly all operational systems have now been recovered as it continues to strengthen their resilience and increase the pace of transformation in the coming year.
Looking ahead, Machin said: “In the second half, we expect profit to be at least in line with last year. This should give us a springboard into the new financial year and set M&S up for further growth.
“The retail sector is facing significant headwinds – in the first half, cost increases from new taxes were over £50m – but there is much within our control and accelerating our cost reduction programme will help to mitigate this.
“Our plan to reshape M&S for long-term sustainable growth is unchanged, our ambitions are undimmed, and our determination to knuckle down and deliver is stronger than ever.”
