Britain's M&S says cyberattack to cost R7.2bn

British retailer Marks & Spencer (M&S) said on Wednesday a “highly sophisticated and targeted cyberattack” would cost it about £300m (R7.20bn) 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 shops, has shocked the retail sector. It forced M&S's online clothing operation offline, left some food shelves bare and wiped more than £1bn (R24bn) from the company's stock market value.

M&S, which was trading strongly before the hack, said online disruption in its fashion, home and beauty division 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, though shop 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. Food sales had since improved.

The company said it hoped to halve the expected profit hit for its 2025/2026 year through the “management of costs, insurance and other trading actions”.

Shares in M&S were down 3.4% in early trade on Wednesday, extending losses since the cyberattack to 13%.

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.

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.

CEO Stuart Machin said M&S had overcome many challenges in the past 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, adding that customers had been “unwavering in their support”.

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 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% rise in adjusted pretax profit to £875.5m (R21.02bn), the highest in more than 15 years, for the year to March 29, before analysts' average forecast of £840m (R20.16bn).

Sales increased 6.1% to £13.9bn (R333.73bn), with food sales up 8.7% and clothing, home and beauty sales up 3.5%, 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.

Reuters