Marks and Spencer’s profits have plunged amid the fallout from a major cyber attack earlier this year, results show.
The retailer said its underlying pre-tax profit slumped 55.4 per cent to £184.1million in the six months to 27 September.
On a reported basis, profits were almost wiped out, plunging just over 99 per cent to £3.4million, from £391.9million a year ago.
The cyber attack saw online home and fashion sales drop 40 per cent after the group was forced to halt website orders.
M&S said the cost of the attack looked set to total around £136million, including a further £34million in the final six months of its financial year.
However, the business was able to recover £100million in its first half via an insurance payout for the hack.
Impact: Marks and Spencer’s profits have plunged amid the fallout from a major cyber attack earlier this year
Marks & Spencer said sales in its fashion arm fell by 16.4 per cent as the cyber attack wrought havoc, with sales online tumbling 42.9 per cent and 3.4 per cent lower across its stores.
The attack on M&S’s IT systems over the Easter weekend forced the retailer to halt orders via its website, via which it sells fashion, homeware and gifts, for more than six weeks.
Deliveries of food and fashion into stores and some deliveries to its online food partner, Ocado, were also disrupted.
Customer personal data – which could have included names, email addresses, postal addresses and dates of birth – was also taken by hackers.
Impact: There were empty shelves at many Marks & Spencer shops in the aftermath of the cyber attack
Stuart Machin, chief executive of Marks and Spencer, said on Thursday: ‘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 £50million from the national insurance hike in April over its first half.
But the company expects profits to be ‘at least in line with last year’ in the final six months of its financial year as it ramped up its cost-cutting target to £600million.
Machin said: ‘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.’
The retailer 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.
M&S said: ‘We are confident we will be recovered and back on track by the financial year – end.’
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