Marks and Spencer’s profits have fallen by more than half, following the major cyber attack it suffered earlier this year.
The hack impacted app and website orders, meaning online home and fashion sales plunged more than 40 per cent when the company had to stop taking orders.
However, the total stated impact so far is significantly lower than the £300m estimate the company gave in May.
M&S said the cost of the attack is set to total around £136m, including about another £34m in the final six months of its financial year, but it was able to recover £100m in its first half through an insurance payout for the hack.
In the aftermath of the attack, M&S announced 12 new food stores would open, including eight by summer 2026. An additional 550 jobs are expected to be created through the expansion.
The retail giant reported its underlying pre-tax profits tumbled 55.4 per cent to £184.1m in the six months to 27 September.
On a reported basis, profits were almost wiped out, plunging to £3.4m from £391.9m a year ago.
The group said sales in its fashion arm dropped by 16.4% as the cyber attack wrought havoc, with sales online down 42.9% and 3.4% lower across its stores.
The high street stalwart stopped all online sales for around six weeks and suffered empty shelves due to disruption to its logistics systems after hackers targeted the business around the Easter weekend.
Customer personal data – which could have included names, email addresses, postal addresses and dates of birth – was also taken by hackers.
Stuart Machin, chief executive of Marks and Spencer, said: “The first half of this year was an extraordinary moment in time for M&S.
“However, the underlying strength of our business and robust financial foundations gave us the resilience to face into the challenge and deal with it. We are now getting back on track.”
He said the group also faced cost increases of more than £50 million from the national insurance hike in April over its first half, but that he expects profits to be “at least in line with last year” in the final six months of its financial year as it ramps up its cost-cutting target to £600 million.
“The retail sector is facing significant headwinds… but there is much within our control and accelerating our cost-reduction programme will help to mitigate this,” he added.
In May, Mr Machin said the attack, which was caused by “human error”, was expected to cost the company around £300 million, before insurance claims or cost reductions to offset the impact.
M&S reported a surge in activity after its clothing, home and beauty sales returned online but some competitors such as Next saw market share grow during the period of disruption, suggesting some online shoppers went elsewhere.
(Additional reporting by PA)
This article was written by Karl Matchett from The Independent and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.