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(Alliance News) - Marks & Spencer Group PLC on Wednesday warned that the recent cyberattack that it suffered could reduce operating profit by around GBP300 million in the current financial year, even as the retailer reported a significant rise in annual earnings.
The London-based clothing, homewares and feed retailer said the cyber incident, which occurred around Easter, caused major disruption to its online operations and food logistics, leading to reduced availability, higher costs and suspended orders.
M&S said online sales in its Fashion, Home & Beauty division were "heavily impacted" and that disruption to online operations is set "to continue throughout June and into July as we restart, then ramp up operations".
The attack also resulted in the theft of customer data, which could have including names, email addresses, postal addresses and dates of birth, according to PA.
Despite this, Chief Executive Stuart Machin struck a confident tone. "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.
M&S said it expects to offset some of the GBP300 million impact through insurance proceeds, cost-cutting, and other mitigation measures. PA cited reports that suggest it may recover up to GBP100 million from its insurer.
The disruption comes after a strong financial performance by M&S in the 52 weeks that ended March 29, all prior to the cyberattack. Adjusted pretax profit rose 22% to GBP875.5 million from GBP716.4 million, the highest in over 15 years.
Revenue rose 6.0% to GBP13.82 billion from GBP13.04 billion
Food was a standout performer, with sales up 8.7% to GBP9.0 billion and adjusted operating profit up 25% to GBP484.1 million. Like-for-like food sales rose 8.6%, with the business outperforming the wider market and gaining 27 basis points in share.
Fashion, Home & Beauty sales rose 3.5% to GBP4.24 billion, and operating profit increased by 9% to GBP475.3 million. The division saw growing appeal among style-conscious shoppers, M&S said, with online partner brand sales rising 42% and market share up 57 basis points to around 11%.
Statutory pretax profit, however, declined by 24% to GBP511.8 million, reflecting a GBP248.5 million non-cash impairment related to M&S's investment in the Ocado Retail Ltd joint venture with Ocado Group PLC. M&S will fully consolidate Ocado Retail into group reporting from financial 2026.
M&S raised its full-year dividend by 20% to 3.6p from 3.0p.
The company , and reported free cash flow of GBP443.3 million.
It also revealed plans to increase capital expenditure to between GBP600 million and GBP650 million in financial 2026 to drive further growth and technology upgrades.
CEO Machin said the company had started the new year with trading "ahead of budget" before the cyber incident, and that it remains committed to its strategy of reshaping the business. "There is no change to our strategy and our longer-term plans to reshape M&S for growth," he said.
M&S shares were down 0.8% to 359.10 pence on Wednesday morning in London. The wider FTSE 100 index was marginally higher.
By Eva Castanedo, Alliance News reporter
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