M&S says cyber-attack disruption to last until July and is likely to cost £300 million
M&S has warned that disruption caused by its recent cyber-attack is expected to continue until July and will reduce operating profits by around £300 million as it reported its financial results for the year to 29 March.
During the period, pre-tax profit before adjusting items increased by 22.2% at £875.5 million while group sales climbed by 6.1%.
Food sales rose by 8.7% to £9 billion, with like-for-like growth of 8.6%, as M&S boosted its value perception through prices being ‘dropped and locked’ on key shopping list items such as salmon fillets, fresh soups, potatoes and tinned tomatoes.
Meanwhile, fashion, home and beauty sales edged up 3.5% to £4.2 billion after the retailer grew its offering for women and men in categories like jeans, knitwear and tops.
Stuart Machin, chief executive of M&S, said: “Three years ago, we introduced our Reshaping M&S for Growth plan with the objective of protecting the magic of M&S and modernising the rest.
Never Miss a Retail Update!“Executing that strategy has delivered a third consecutive year of growth in sales and market share, profit and improving return on capital.
“Our food business had another strong year as more customers chose to fill their trolleys with M&S food, more often. Our continuous investment in quality, value and innovation is paying off”.
“In fashion, home and beauty, our authoritative lead in quality and value perception and much improved style credentials has broadened appeal and grown market share.”
Giving an update on the impact of its recent cyber-attack, M&S said it estimates that the financial impact on group operating profit will be around £300 million for its current financial year. However, this is expected to be reduced through management of costs, insurance and other trading actions.
The retailer also stated that it has net funds of over £400 million and is in the “best financial health for nearly 30 years”.
M&S customers have been unable to order online for the last three weeks.
Machin said: “Over the last few weeks, we have been managing a highly sophisticated and targeted cyber-attack, which has led to a limited period of disruption. We have tackled this head on with incredible spirit, teamwork and deep sense of responsibility as we prioritised serving our customers.
“It has been challenging, but it is a moment in time, and we are now focused on recovery, with the aim of exiting this period a much stronger business.
“There is no change to our strategy and our longer-term plans to reshape M&S for growth and, if anything, the incident allows us to accelerate the pace of change as we draw a line and move on.
“Over the last 140 years, M&S has overcome many challenges – testament to the longevity of this brand. This incident is a bump in the road, and we will come out of this in better shape, and continue our plan to reshape M&S for customers, colleagues and shareholders.”
