M&S expects profit recovery after cyber hack-driven slump
By James Davey
Marks & Spencer's Profit Outlook and Recovery Strategy
LONDON, May 20 (Reuters) - British retailer Marks & Spencer forecast a return to profit growth this year after it slumped 24% in 2025/26, hit by a disruptive cyberattack that dented sales and margins.
The 142-year-old M&S, one of the biggest names on the UK high street, said it entered its current reporting year to March 2027 with a clear plan and a strong balance sheet and was focused on delivering further improvements to product availability and service levels.
Profit Growth Expectations
"Profit growth is expected to resume versus 2024/25," it said on Wednesday, sending its shares up 5%.
Challenges and Mitigation Plans
M&S said its outlook for the current year takes account of higher fuel, freight and input costs caused by the Iran war and continued government tax levies and regulatory challenges for the sector.
Cost Management Strategies
It would mitigate these through improved buying, reinvestment in value to drive volume, and savings from its structural cost-reduction programme.
Investor Perspective
Dominic Younger, fund manager at Columbia Threadneedle Investments, one of M&S' top five investors, said the group's update drew a line under a year of huge adversity.
Resilience After Crisis
"When actively investing on behalf of clients, we look for companies to emerge from crises stronger and it is a credit to M&S that, just as we saw after COVID, the business appears in good shape to face the fresh challenges of this year.”
Impact of the Cyberattack
Operational Disruptions
ONLINE CLOTHING ORDERS SUSPENDED
The cyberattack forced M&S to suspend online clothing orders for seven weeks and click-and-collect services for nearly four. Clothing and food availability in stores was also hit, while additional waste and logistics costs were incurred.
Leadership Response
"We were laser focused on our customers, worked incredibly hard to recover our business, and we came out stronger," CEO Stuart Machin said.
Financial Impact
The group made adjusted profit before tax of £671.4 million in the year to March 28, down from £881.1 million in 2024/25. Second-half profit grew 4.1% from the previous year.
M&S said costs related to the cyber hack were £131.3 million.
Performance by Division
Food Division
While food sales rose 7.0% and the division grew market share, sales in fashion, home and beauty slid 7.7%.
Fashion, Home and Beauty Division
Machin said recovery in fashion, home and beauty has taken longer, "but there is strong growth potential."
Sector-wide Challenges
Headwinds for Retailers
He also said, however, that retailers faced "a triple whammy of headwinds with increased taxation, a greater regulatory burden and ongoing global conflict."
Consumer Spending Trends
British consumers, shaken by the inflationary impact of the Middle East conflict, cut their spending last month for the first time since November 2024, a survey by Barclays showed last week.
Reporting and Editing Credits
(Reporting by James Davey; editing by Sarah Young, Elizabeth Piper and Tomasz Janowski)
