LONDON: British retailer Marks & Spencer (M&S) said on Wednesday (May 21) a “highly sophisticated cyber” attack would cost it about £300 million (US$403 million) in operating profit, with disruption set to run into July.
The attack on one of the biggest names in Britain, with 64,000 staff and 565 stores, sent shockwaves through the retail sector.
It forced its online clothing operation offline, left some food shelves bare, and wiped over a billion pounds from the company’s stock market value.
M&S, which was trading strongly before the hack, said online disruption would continue throughout June and into July as it restarts systems and then ramps up operations.
Online sales and trading profit in that division had been “heavily impacted” by the decision to suspend online shopping, it said, though store sales had “remained resilient”.
In food, M&S said it had been hit by reduced availability and higher waste and logistics costs as it was forced to return to pen and paper systems. It said food sales had since improved.
The company said it hoped to halve the expected profit hit for its 2025/26 year through the “management of costs, insurance and other trading actions”.
Shares in M&S were down 3.4 per cent in early trade on Wednesday, extending losses since the cyberattack to 13 per cent.
The group said it would use the crisis to “accelerate the pace of improvement of our technology transformation” and had found new and innovative ways of working.
“We are focused on recovery, restoring our systems, operations and customer proposition over the rest of the first half, with the aim of exiting this period a much stronger business,” it said.
“BUMP IN THE ROAD”
British companies and institutions have been hit by increasingly aggressive and regular cyber and ransomware attacks in recent years, with the British Library, a blood testing service and the London Underground all suffering months of disruption.
Chief Executive Stuart Machin said M&S had overcome many challenges in the last 140 years and would do so again.
“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,” he said.
Customers had been “unwavering in their support”, he said.
With hackers having also hit the Co-op and Harrods in Britain, and Google saying last week those responsible were targeting US companies, retailers worldwide are racing to boost defences.
M&S said last week that some personal customer information had been stolen in the hack.
The cyberattack also overshadowed the progress M&S had made with its turnaround plan.
It reported a 22.2 per cent rise in adjusted pretax profit to 875.5 million pounds, the highest in over 15 years, for the year to Mar 29, ahead of analysts’ average forecast of £840 million pounds.
Sales increased 6.1 per cent to 13.9 billion pounds, with food sales up 8.7 per cent and clothing, home and beauty sales up 3.5 per cent, with the group winning market share in both divisions.
Some rivals are likely to benefit.
Earlier this month, clothing rival Next raised its profit outlook after strong first-quarter trading. Analysts think it will get a trading tailwind from M&S’ online problems, as will John Lewis, Tesco and Sainsbury’s.
