Marks & Spencer has warned it is facing a £300m loss as a result of its ongoing ransomware attack – equivalent to 30% of profits – with disruption to its operations set to drag on until July.
Ironically, M&S gave the update while revealing its annual financial results for the year to March 29, which showed trading profits at a 15-year high. M&S reported a 22.2% rise to £875.5m, with sales up across each of its product divisions.
The statement added that it aims to reduce the hit to operating profits this year through management of costs, insurance and other trading actions. It is expected that costs directly relating to the incident will be presented separately as an adjusting item.
On the upside, M&S expects to resume online sales – at least partially – in a couple of weeks’ time.
The company said: “Over the last few weeks, we have been managing a highly sophisticated cyber incident. As a team, we have worked around the clock with suppliers and partners to contain the incident and stabilise operations, taking proactive measures to minimise the disruption for customers.
“We are seeking to make the most of the opportunity to accelerate the pace of improvement of our technology transformation and have found new and innovative ways of working.
“We are focused on recovery, restoring our systems, operations and customer proposition over the rest of the first half, with the aim of exiting this period a much stronger business.”
M&S added that food sales have been impacted by reduced availability, although it claims this is already improving. It has also incurred additional waste and logistics costs, due to the need to operate manual processes, impacting profit in the first quarter.
The retailer added: “In Fashion, Home & Beauty, online sales and trading profit have been heavily impacted by the necessary decision to pause online shopping, however stores have remained resilient.
“We expect online disruption to continue throughout June and into July as we restart, then ramp up operations. This will also mean increased stock management costs in the second quarter.”
Chief executive Stuart Machin, who it claimed is facing a cut of £1.06m to his total pay as a result of the cyber-attack, insisted the incident was just a “bump in the road”.
He added: “We will come out of this in better shape, and continue our plan to reshape M&S for customers, colleagues and shareholders.”
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