5th Nov 2025 09:05
(Alliance News) - Marks & Spencer Group PLC on Wednesday said it expects profit to recover after April's cyber attack saw its bottom line slump in the financial first half.
The London-based clothing, food and homewares retailer said pretax profit slumped 99% to GBP3.4 million in the half year to September 27 from GBP391.9 million the year prior.
M&S said results reflect April's cyber incident impact, which forced the firm to halt online orders after it was targeted by hackers, and the cost of recovery.
On an adjusted basis, pretax profit fell 55% to GBP184.1 million from GBP413.1 million, driven
by lower online sales and increased stock management costs in Fashion, Home & Beauty and higher markdown and waste in Food.
The retailer took GBP101.6 million of costs from the cyber attack in the first half, while sales suffered across the business. Further charges of GBP34 million are expected in the second half of the financial year.
This was partially offset by GBP100 million insurance proceeds.
Chief Executive Stuart Machin called the first half an "extraordinary moment in time for M&S," but noted the "underlying strength of our business and robust financial foundations gave us the resilience to face into the challenge and deal with it."
Group revenue rose 23% to GBP7.94 billion in the first half from GBP6.48 billion, including GBP1.48 billion of revenue from Ocado Retail Ltd.
From financial 2026, results from the Ocado Retail joint venture results are consolidated by M&S and aligned with M&S's year-end accounting period.
At Ocado Retail, the operating loss before adjusting items shrunk to GBP3.6 million from GBP12.5 million.
The FTSE 100 listing said the Food business is now largely recovered from the cyber attack and is showing strong sales performance and margins are closer to normal.
But recovery in Fashion, Home & Beauty, has been slower, as "systems complexity means it has taken time to smooth the flow of stock."
Food sales rose by 7.8% with operating profit of GBP89.1 million reflecting a margin decline to 2.0% from 5.1%, largely due to the higher level of markdown and waste caused by manual stock allocation.
With systems now restored, markdown and waste have reduced, and operational metrics and gross margins are closer to normal, M&S said.
Fashion, Home & Beauty sales declined by 16%, due to the temporary pause in online operations from late April to early June and a gradual recovery over the summer.
Lower sales and higher stock management costs led to an operating profit of GBP46.1 million and a margin decline to 2.7% from 12.0 %.
"With warehouse systems now restored, both our website and stores are improving availability, and trading is recovering," the firm added.
M&S said results were also impacted by significant new cost increases of over GBP50 million for the new Extended Producer Responsibility packaging levy and higher national insurance contributions.
Looking ahead, M&S said the consumer environment "remains as uncertain as ever."
But the firm is confident "we will be recovered and back on track by the financial year-end," and in the second half anticipates profit at least in line with last year.
CEO Machin said the 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."
He said there is "so much more to do and so much opportunity ahead of us."
"It's all to play for," he added.
The company anticipates annual capital expenditure of between GBP650 million to GBP750 million.
M&S said it has lifted its interim dividend by 20% to 1.2p per share from 1.0p.
"A strong balance sheet, cash flow performance and dividend cover allow for further growth in the medium-term," it said.
Shares in M&S were down 0.8% at 381.60 pence each in London on Wednesday.
By Jeremy Cutler, Alliance News reporter
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