Marks & Spencer has reported a slump in sales and profits due to disruption from a major cyber attack last year that halted online clothing sales. Nevertheless, the retailer said it has emerged from the year “stronger” and expects to return to profit growth this financial year, compared with levels before the cyber incident.
Cyber Attack Impact
M&S was forced to suspend all online sales for approximately six weeks and faced empty shelves due to logistics system disruption after being targeted by hackers around Easter weekend last year. The London-listed firm disclosed late last year that the incident would reduce its annual profits by about £136 million.
Financial Results
On Wednesday, the high street giant announced that adjusted pre-tax profits fell by 23.8% to £671.4 million for the year. Revenues dropped by 25% to £13.8 billion for the year to March 29, compared with the previous year.
The cyber attack particularly affected the group’s fashion, home, and beauty operations, with online sales suspended, stock flow disrupted, and availability restricted. Sales in this division fell by 7.7% over the past year, while profits from the category declined by more than half after markdowns and clearance of excess seasonal stock.
Food Division Performance
In contrast, the group’s food arm reported 7% sales growth for the year. M&S also advanced its major transformation plan, which included opening 12 new food stores and three full-line stores offering both food and clothing.
CEO Comments
Boss Stuart Machin stressed that the group is making progress despite cost pressures from increased government regulation and the war in the Middle East. He said: “Retailers face a triple whammy of headwinds with increased taxation, a greater regulatory burden and ongoing global conflict. At M&S we are unshaken by short-term events. We have a clear plan and there is much within our control as we reinvest in value and quality for our customers.”
