M&S warns of £300m profit hit from cyber attack
M&S has warned it is facing a £300m hit to its profits next year as it grapples with the fallout from last month’s ransomware attack.
M&S has warned it is facing a £300m hit to its profits next year as it grapples with the fallout from last month’s ransomware attack.
The retail giant was forced to halt online orders and has struggled to keep store shelves stocked following what it described as a “highly sophisticated cyber incident”.
It has forecast an impact of £300m on group operating profit for its current financial year before mitigation, “which will be reduced through management of costs, insurance and other trading actions”.
M&S said: “As a team, we have worked around the clock with suppliers and partners to contain the incident and stabilise operations, taking proactive measures to minimise the disruption for customers.
“We are seeking to make the most of the opportunity to accelerate the pace of improvement of our technology transformation and have 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.”
The retailer expects online disruption to continue through June and into July “as we restart, then ramp up operations”. It anticipates increased stock management costs in the second quarter.
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M&S continued: “Since the incident, food sales have been impacted by reduced availability, although this is already improving.
“We have also incurred additional waste and logistics costs, due to the need to operate manual processes, impacting profit in the first quarter.
“In Fashion, Home & Beauty, online sales and trading profit have been heavily impacted by the necessary decision to pause online shopping, however stores have remained resilient.”
The update came as M&S revealed its profit before tax and adjusting items had rocketed 22% to £875.5m in the year to 29 March, up from £716.4m.
Sales rose 6% to £13.9bn, driven by an 8.6% jump in food like-for-likes to £9bn and 4.4% lift in fashion, home and beauty to £4.2bn.
The retailer’s chief executive Stuart Machin said: “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.”
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