Cyber Attack Halves M&S Profits
Marks & Spencer (M&S) experienced significant disruptions due to a cyber attack that halted online orders for nearly two months. The company also suspended its click-and-collect service for close to four months.
Financial Impact of the Cyber Attack on M&S
In its financial report for the six months ending in September, M&S noted that despite these challenges, the company showed resilience. It indicated confidence in returning to full-year profit levels similar to the previous year.
Sales Performance Amidst Disruption
- M&S’s homewares and fashion divisions reported a sales decline of approximately 16%.
- Analyst Judith MacKenzie termed this decline as “pretty resilient,” considering the limited trading period.
- Food sales, however, increased by 7.8%. This performance was achieved during what analysts described as “a pretty horrendous period.”
Cost Implications and Future Expectations
Initially, M&S estimated that the cyber attack would result in costs of around £300 million. Fortunately, actual costs turned out to be lower than anticipated.
Lucy Rumbold, an equity research analyst at Quilter, expressed optimism regarding the company’s recovery. She noted that while key divisions faced some impact, the overall brand remained strong. Rumbold suggested that the cyber attack likely represented a one-time incident.
| Financial Metrics | Impact of Cyber Attack |
|---|---|
| Estimated Costs | £300 million |
| Homewares & Fashion Sales Decline | 16% |
| Food Sales Growth | 7.8% |
Looking Ahead
M&S is optimistic about the second half of the year. The company anticipates a recovery in profits that aligns with previous levels by 2024. As the lingering effects of the cyber incident diminish, M&S aims to resume normal trading operations and restore its positive trajectory.
