Marks and Spencer's profits have more than halved after suffering a major cyberattack earlier this year, which led to a more than 40% drop in online home and fashion sales when the company was forced to suspend website orders.
The retail giant reported that its underlying pre-tax profits plummeted 55.4% to £184.1 million in the six months up to September 27.
On a reported basis, profits nearly vanished, falling to £3.4 million from £391.9 million a year ago.
M&S stated the cost of the attack is expected to total around £136 million, including about an additional £34 million in the final six months of its financial year, but it managed to recover £100 million in its first half through an insurance payout for the hack.
The total impact is lower than the £300 million cost estimate provided by M&S in May.
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The group reported that sales in its fashion division dropped by 16.4% as the cyberattack caused significant disruption, with online sales down 42.9% and 3.4% lower across its stores.
The high street staple halted all online sales for about six weeks and faced empty shelves due to disturbances in 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 stolen by hackers.
Stuart Machin, chief executive of Marks and Spencer, said: “The first half of this year was an extraordinary moment in time for M&S.
“However, the underlying strength of our business and robust financial foundations provided us the resilience to confront the challenge and manage it.
“We are now getting back on track.”
He mentioned the group also encountered cost increases of more than £50 million from the national insurance hike in April during its first half, but he expects profits to be “at least in line with last year” in the final six months of its financial year as the company intensifies its cost-cutting aim to £600 million.
“The retail sector is facing significant headwinds, but there is much within our control, and accelerating our cost-reduction program will help to mitigate this,” he added.
In May, Mr. Machin said the attack, which was due to “human error,” was anticipated to cost the company around £300 million, before considering insurance claims or cost reductions to offset the impact.
M&S reported a surge in activity after its clothing, home, and beauty sales returned online, but some competitors like Next saw market share growth during the disruption period, indicating that some online shoppers went elsewhere.
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