M&S boss warns customer confidence dented by Budget worries

The boss of Marks & Spencer has said Chancellor Rachel Reeves’s pre-Budget speech had fuelled customer worries over tax hikes and warned shoppers were now “planning for the worst”.

Chief executive Stuart Machin said the retailer’s customers were “increasingly concerned about rising costs and taxes” and what might be in store in the upcoming Budget.

He said the Chancellor’s unusual step to deliver a pre-Budget speech on Tuesday did not help ease fears or give certainty to businesses and consumers.

Ms Reeves braced the UK for possible income tax rises in her November 26 Budget, warning everyone will “have to contribute” to help rebuild the economy and repair the country’s finances.

Mr Machin said: “The presentation may have calmed the bond markets but it hasn’t really calmed our customers.

“They might be planning for a good Christmas, but may be planning for the worst for the Budget.”

He said the group had been “hoping for some news” so it could start planning, but added “we’re all sitting here waiting for the 26th”.

He said: “Why don’t they just issue the Budget now? That’s what’s on people’s minds.

“That’s what’s on our minds, running a business.”

For M&S, the most feared outcome of the Budget would be tax hikes that “hit our customers’ pockets or the everyday economy”, according to Mr Machin.

“That wouldn’t be good and wouldn’t be a growth strategy in my view.”

His comments came as the boss of JD Wetherspoon, Sir Tim Martin, also on Wednesday raised worries over the upcoming Budget, saying the group was more cautious over the outlook with the Budget looming large.

The retail sector has already been sent reeling by April’s rise in the National Insurance contributions, announced in last year’s budget, as well as new packaging taxes.

Together, these taxes cost M&S £50 million in its first half, M&S revealed.

Mr Machin said while Ms Reeves has a “tough” job to do in getting the public finances back on track, “you can’t keep blaming the past and we have to move on”.

“We would like the chancellor to commit to growth and not more taxes,” he said.

His comments came as M&S revealed interim profits more than halved after it took a hit from a major cyber attack earlier this year.

It reported underlying pre-tax profits tumbling 55.4% to £184.1 million in the six months to September 27.

On a reported basis, profits were almost wiped out, plunging to £3.4 million from £391.9 million a year ago.

M&S said the hack cost it £324 million in lost sales – slightly more than its £300 million earlier estimate – but it was able to recover £100 million in its first half through an insurance payout.

In terms of the hit to its bottom line, the attack is set to impact profits by around £136 million, with a £101.6 million impact in the first half and about another £34 million in the final six months of its financial year.

The group said sales in its fashion arm dropped by 16.4% as the cyber attack wrought havoc, with sales plummeting 42.9% across its online operations and 3.4% lower across its stores.

The high street stalwart stopped all online sales for around six weeks and suffered empty shelves due to disruption to its logistics systems after hackers targeted the business around the Easter weekend.

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

Mr Machin said the group was getting “back on track” and expects profits to be “at least in line with last year” in the second half as it ramps up its cost-cutting target to £600 million.