Marks & Spencer is “getting back on track” after a devastating cyber attack sent first-half profits down, but its clothing division is recovering more slowly than its food business.
Marks & Spencer reported a 55.4% slide in adjusted pre-tax profits in the first half of its financial year, when it was targeted by cyber-criminals, leading to the suspension of online sales of clothing and availability problems with food. Sales rose 22.1% to £7.96bn in the period to September 27.
Food sales rose 7.8%, generating an adjusted operating profit of £89.1m. Fashion, home and beauty sales slid 16.4%, leading to an adjusted operating profit of £46.1m.
At a statutory level, M&S’ profit before tax evaporated by 99% to £3.4m.
The retailer is recieving about £100m in insurance following the attack.
Marks & Spencer chief executive Stuart Machin 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 the challenge and deal with it. We are now getting back on track.
“Change, on the other hand, is not a moment. Change is constant and that is why we are resolute in our ambition to reshape M&S for growth. During the half, we accelerated our transformation with investment in our priority areas: opening 15 new or renewed stores in H1 and planning more than 20 for H2; strengthening our technology foundations; and confirming our new automated food distribution centre, which is critical to modernising our supply chain and getting ahead of growth.
“Today, we are regaining momentum. In food, we continue to outperform the market, with three years of consecutive monthly volume growth. Our obsession with quality and innovation is paying off, underpinned by a relentless focus on trusted value, with value ranges growing year-on-year.
“In fashion, home and beauty, the recovery curve has been slower than food, but we are making progress every day. Our stronger style credentials mean our fashion is resonating and we continue to lead the market on quality and value. We are determined to help our customers have a fantastic Christmas with exceptional service and what I truly believe is the best Christmas food and fashion in the market.
“Thank you to our colleagues for their hard work, our suppliers for their support and our customers for their loyalty.”
Profits in the second half are expected to be ”at least in line with last year”.
Machin added: “This should give us a springboard into the new financial year and set M&S up for further growth. The retail sector is facing significant headwinds – in the first half, cost increases from new taxes were over £50m – but there is much within our control and accelerating our cost reduction programme will help to mitigate this.
“Our plan to reshape M&S for long-term sustainable growth is unchanged, our ambitions are undimmed, and our determination to knuckle down and deliver is stronger than ever. To date, we have achieved meaningful progress, but what’s exciting is that there is so much more to do and so much opportunity ahead of us. It’s all to play for.”
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