Marks & Spencer Reports Profit Drop After Cyberattack but Signals Recovery Plan
Marks & Spencer Reports Profit Drop After Cyberattack but Signals Recovery Plan
Marks & Spencer Group plc reported a difficult but important financial year, as the British retailer faced the effects of a major cyber incident while continuing its long-term transformation plan. The company said adjusted profit before tax fell to £671.4 million, while total group sales reached £17.4 billion. Excluding Ocado Retail, group sales were £14.2 billion.
Cyberattack Weighs on Annual Performance
The biggest pressure on the results came from a cyberattack that disrupted online clothing orders, stock flow, store replenishment, and parts of the group’s operations. M&S said cyber-related adjusting costs reached about £131 million, while Reuters reported that adjusted pre-tax profit declined from the prior year mainly because of this disruption.
The company’s fashion, home, and beauty division was hit hardest. Online orders were paused for around six weeks, and the business later faced availability problems as stock moved slowly through the supply chain. This led to higher markdowns and weaker sales in the division.
Food Business Remains the Bright Spot
M&S said its food division delivered strong growth, with sales up 7%. The company credited product upgrades, better value ranges, innovation, and new store openings. Management also said food market share improved, showing that more shoppers are choosing M&S for regular grocery trips.
However, food margins were lower than the previous year because the cyber incident forced more manual stock handling, which increased waste and markdowns in the first half. By the second half, management said the food business had recovered well and delivered stronger profit growth.
Ocado Retail Adds Growth
Ocado Retail, the online grocery joint venture, also contributed to the group’s wider sales growth. Sales at Ocado Retail rose as customer numbers and shopping frequency improved. M&S product sales through Ocado passed £1 billion for the first time, showing progress in the company’s digital grocery strategy.
Balance Sheet Supports Transformation
Despite the profit decline, M&S ended the period with £338.2 million in net funds excluding leases. The company also reported £131.3 million in free cash flow from operations, giving it room to continue investing in stores, supply chain upgrades, automation, and technology.
Management described the next stage as “reinvesting for growth.” This includes improving store formats, strengthening the supply chain, expanding automation, and using technology to make the business more efficient.
Investors React Positively to Recovery Outlook
Although the annual figures showed clear pressure, investors appeared to focus on the recovery plan. Reuters reported that M&S expects profit growth to resume in the current financial year, supported by better product availability, improved service, and cost efficiencies.
The company’s shares rose after the update, suggesting that investors believe the cyber disruption may be a temporary setback rather than a permanent problem.
Outlook
M&S enters the new financial year with both challenges and opportunities. The cyberattack exposed weaknesses in digital operations and supply-chain resilience, but the company’s food business remains strong, Ocado is growing, and the balance sheet is healthy.
For the year ahead, the key question is whether M&S can turn recovery into steady growth. If the retailer restores fashion availability, protects food momentum, and keeps costs under control, it may continue its wider turnaround. The latest results show a company under pressure, but not off course.
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