Marks and Spencer expects £300mn revenue hit from cyber assault | USAEMALL.com

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UK retailer Marks and Spencer has said it expects a £300mn hit to profits this year from a cyber attack last month. 

The company, whose operations have been disrupted by the hack, forecast a £300mn impact on group operating profit for this financial year before mitigation “through management of costs, insurance and other trading actions”. 

Chief executive Stuart Machin said the incident had been challenging “but it is a moment in time” and “a bump in the road” and there would be no change to the company’s transformation plans.

The FTSE 100 group said for the first time last week that some personal customer data had been stolen during the attack, which has left it unable to accept online orders for more than three weeks and led to empty shelves in some stores.

In an update alongside its full-year results on Wednesday, the company said that online sales and trading profit for clothing and home goods in the first quarter had been hit by its decision to pause online shopping because of the attack. It expects disruption to continue throughout June and into July.

It said that food sales had also been affected by reduced availability, although it added that this was improving. The hack has incurred additional waste and logistics costs and has wiped almost £750mn off M&S’s market capitalisation.

Some of the financial effect will be mitigated by insurance. The Financial Times reported earlier this month that Marks and Spencer could claim for losses of as much as £100mn.

M&S said on Wednesday that it was working around the clock to contain the “highly sophisticated and targeted cyber attack” and stabilise operations.

The cyber attack overshadows strong results for the year to March 29. The company posted a 22.2 per cent increase in profit before tax and adjusting items to £875.5mn — its preferred metric — beating analyst expectations. Sales rose 6.1 per cent to almost £14bn.

However, its pre-tax profits fell by almost 24 per cent to £511.8mn, partly because of a £248.5mn non-cash impairment on its 50 per cent stake in Ocado Retail, the online supermarket.