Marks&Spencer Faces £12M Loss Amid Cybersecurity Breach in First Half

Marks&Spencer closes its first half of the year weighed down by the cyber-attack that paralyzed its online business for months. The company has attributed the drop in business in its fashion division to this incident, which occurred at the end of May and kept the website and online orders temporarily paralyzed.

The British department store operator thus closed the first six months of the year (period ended September 27th) with a loss of £11.8 million ($15.4 million), compared to the 278.6 million pounds ($364 million) it earned the previous year. The group’s operating profit also suffered, falling from 448.7 million ($586.5 million) to just 91 million pounds ($118 million).

“The last six months have been an extraordinary period for the company, and the temporary effects of the (cybersecurity) incident can be seen reflected in the first half results,“ the company explained. Falling online sales, rising operating costs in the fashion segment and higher discounting and wastage in the grocery line weighed down the UK operator’s first-half profit.

Marks&Spencer sold 16.4% less through the fashion, cosmetics and home category

The drop in business came despite an increase of up to 22.5% in Marks&Spencer’s sales to 7,942.3 million pounds ($10.3 billion). This rise, however, was uneven across the business lines, as while the operator’s food store sales rose by 7.8% during the period, fashion posted a decline.

Through the fashion, cosmetics and home category, Marks&Spencer posted sales of 1,697.6 million pounds ($2.21 billion), 16.4% less than in the first six months of the previous year. The cyber-attack, the company reports, forced it to halt online orders, as well as the pick-and-collect service and in-store orders, which has weighed down both sales and operating margin, which fell from 12% to just 2.7%.

Looking ahead to the rest of the year, the company expects to keep profit in line with 2024 results, and lay the groundwork for further growth from the following year. “The sector is facing significant difficulties - the company added, putting tax costs at more than £50 million in the first half - but there are still many aspects under our control, together with improved cost reduction, that will help us mitigate the situation.“