Cyber attack results in 99% fall in M&S profits

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A devastating cyber attack has virtually obliterated Marks and Spencer’s first-half statutory profit before tax, causing a 99% plunge from £391.9m to a mere £3.4m.

The high street giant revealed the extraordinary cost of the incident, which saw its online systems taken out of action from Easter well into the summer.

The immediate cost of the incident – covering systems response, recovery, and specialist legal support – is estimated to be roughly £136m.

However, M&S also anticipates further costs, putting the overall financial impact of the hack broadly in line with its earlier £300m forecast for the financial year. The company has already secured around £100m in insurance money to combat the costs incurred so far.

The ransomware attack, which was executed by tricking employees at a third-party contractor, forced the suspension of online orders for nearly two months, with the click and collect function not fully restored until August.

Beyond the digital disruption, the hack also affected in-store operations, leaving some shelves bare in the weeks immediately following the April attack.

This “extraordinary moment in time” resulted in a significant drop in key sales areas, with fashion, home, and beauty sales down 16.4% and international sales falling 11.6%.

Even a more generous measure of profit, adjusted profit before tax, saw a sharp drop from £413m to £184m.

Despite the profound hit to its finances, M&S has pointed to underlying resilience, particularly in its food division, which recorded three consecutive years of monthly volume growth. Competitors like Next reportedly benefited from the suspension of M&S’s sales during the period.

M&S Chief Executive Stuart Machin expressed confidence that the company is “getting back on track,” expecting a substantial recovery in the second half of the financial year, particularly during the crucial Christmas trading period.

The retailer forecasts its profits in the second half of the year to be at least in line with the same period last year, with analysts viewing the disruption as a “one-off” event from which the business is expected to rebound.

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