M&S profit slumps in fallout from cyber attack
Marks & Spencer saw its profit slump by a quarter as the retailer took more than a £100m hit from its “traumatic” cyber attack last year.
The FTSE 100 supermarket and clothing business saw pre-tax profit fall by 29 per cent to £365m in the year to March, despite sales growing by 25 per cent to £17bn – boosted by a strong performance in its food arm.
M&S has been in recovery from a cyber attack last year which crashed its website for 12 weeks and left some of its shelves without food.
The 141-year-old retailer said it faced a “year of two halves” as it battled back to its feet in the first half of the year following the cyber attack, and pushed to return to growth in the second half.
M&S said it took a £131m hit from the cyber attack, and saw sales in its fashion, home and beauty segment fall by eight per cent due to the freeze in online trading during the attack.
In July, M&S chairman Archie Norman told MPs the cyber attack was “traumatic” and felt like hackers were “trying to destroy” his business.
Iran war will push up costs
The retailer said on Wednesday that it will face higher fuel and freight costs due to the Iran war, on top of a heavier tax and regulatory burden.
“Retailers face a triple whammy of headwinds with increased taxation, a greater regulatory burden and ongoing global conflict,” chief executive Stuart Machin said.
M&S said it plans to offset these costs by investing more in its supermarket business, which has recently grown to a four per cent market share, and is set for more store openings.
The retailer has been piling investment to its M&S Food arm in recent months, which accounts for more than half of its revenues.
M&S saw sales at its food arm grow by seven per cent to £9.7bn in the year to March, though profit in this business fell by nine per cent due to higher waste in the first half of the year.
M&S Food on the up
The retailer – like supermarket giants Tesco and Sainsbury’s – is investing in price-cutting to rival discount brands, through its “dropped and locked” range which focuses on discounting protein and fresh produce.
Last week, M&S started construction on a £340m food distribution centre in Northamptonshire, which the company described as a “major step in transforming [it] into a true destination for the weekly shop”.
The retailer’s share price has been on a wild ride in recent months, surging to a recent high just before the Iran war broke out, before sliding back towards its cyber attack lows.
But the stock opened four per cent higher on Wednesday’s early trading, before easing to a two per cent rise to 335p,