M&S to shed light on shopper response to cyber attack disruption

Marks & Spencer is to shed more light on how its shoppers reacted to the retailer’s online shutdown after it was hit by a damaging cyber attack earlier this year.

The high street stalwart stopped all online sales for around six weeks after hackers targeted the business around Easter.

Next week, the retailer will fully report its sales and profits over the period when its systems were hit for the first time.

On Wednesday November 5, the company is expected to reveal that revenues were broadly flat over the half-year to September, despite losing customer sales online.

The cyber incident blighted the business during a period of strong recent trading, with sales across both its grocery and clothing and home divisions delivering significant growth after turnaround efforts led by boss Stuart Machin.

Shares in the company remain close to a nine-year high as investors have kept confidence in the positive trajectory of the historic brand.

Nevertheless, they will be keen for information how progress may have been disrupted by incident.

M&S halted orders on its website and saw empty shelves due to disruption to its logistics systems after first reporting the attack on Easter Sunday.

Customer personal data – which could have included names, email addresses, postal addresses and dates of birth – was also taken by hackers in the attack.

In May, Stuart Machin said the attack, which was caused by “human error”, was expected to cost the company around £300 million, before insurance claims or cost reductions to offset the impact.

Shareholders will therefore be keen to see if there is any adjustment to this guidance, amid hopes that the business may be able to claw back some funds through insurance.

However, there is also uncertainty over how the group’s customers will have reacted to M&S’s online sales shutdown.

M&S reported a surge in activity after its clothing, home and beauty sales returned online but some competitors such as Next saw market share grow during the period of disruption, suggesting some online shoppers went elsewhere.

Russ Mould, AJ Bell investment director, said: “Investors seem to have plenty of faith in the power of the brand and the food offering, plus the ongoing operational improvements in the clothing business, so the interim results will be a good test of whether shoppers and customers feel the same way.”

Analysts have predicted that M&S will reveal half-year adjusted pre-tax profits of around £111 million, which would represent a significant drop as it books the cost of the attack.

It is expected to report a profit between £600 million and £685 million amid a recovery in the second half of the year.

Shareholders will also be keen to see how the company is being impacted by other cost pressures, such as labour cost and tax increases which came into force in April.

M&S has been pushing forward with significant cost efficiency and store investment plans over recent years.

There will also be focus on whether these programmes have been disrupted or in fact accelerated as a result of the hack and its response.