M&S Profit Crumbles Under Cyber Attack Costs

Profit Plunge: First-half net profit down 98% to £6.2m from £282m, cyber hit costs £136m, nearly erasing gains.
Sales Impact: Online clothes orders halted 7 weeks; fashion/home down 16.4%, but food sales up 7.8%.
Recovery Push: £100m insurance claim; second-half profit expected to match last year, full rebound by March 2026.
Bigger Picture: Attack started via third-party error; highlights supply chain risks for retailers like M&S.

Marks & Spencer revealed this week that a cyber attack earlier this year has hammered its finances, slashing first-half profits by 98% and leaving just £6.2 million on the table compared to £282 million last time. The incident, which kicked off around Easter, shut down online clothing sales for seven weeks and messed with in-store stock, forcing manual fixes that jacked up costs. It’s a tough reminder of how one bad breach can ripple through a retail giant, hitting revenue and margins hard while rivals like Next scoop up the slack.

How the Attack Unfolded and Hit Hard

The breach started in April when hackers slipped in through a third-party contractor, encrypting systems and stealing customer data. M&S had to pull the plug on online orders, switch to paper for stock tracking, and deal with empty shelves, click-and-collect didn’t come back until August. Fashion and home sales dropped 16.4% as shoppers turned elsewhere, but food held strong with 7.8% growth from loyal footfall. Total costs topped £136 million for fixes, legal help, and lost sales, with insurance covering £100 million but leaving a £36 million hole.

CEO Stuart Machin called it an “extraordinary moment,” but said the company’s solid base helped weather the storm. Revenue still climbed 22% to £8 billion overall, showing brand strength, though margins tanked from 12% to 2.7%. Extra hits like a new packaging tax added £50 million, but they’re eyeing a rebound with second-half profits matching last year and full recovery by March 2026.

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Rivals like Next gained ground during the outage, underscoring how cyber woes can shift market share fast. M&S is speeding up tech upgrades to prevent repeats, but the £300 million estimated full-year drag (before insurance) shows breaches aren’t just IT problems, they’re profit killers.

For retailers, it’s a call to lock down suppliers and test responses, one slip can cost hundreds of millions and trust overnight.

Resources:

M&S Cyber Costs Slash Profits | Reuters on Retail Hit

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