Cyber attack slashes M&S first half profit by 55.4 percent

British retailer Marks & Spencer (M&S) reported a sharp 55.4 percent decline in first-half underlying profit, a drop that directly reflects the profound impact of a cyber security breach in April. The attack forced M&S to suspend its online clothing orders for seven weeks and severely disrupted its e-commerce platform and backend systems, which affected sales and margins across the Group. In its latest financial report, M&S confirmed the disruption caused by the incident is projected to reduce group operating profit by approximately 300 pounds million for the 2025/26 fiscal year, underscoring the substantial financial toll.

Commenting on the impact of the cyber incident and outlook, CEO Stuart Machin 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 gave us the resilience to face into the challenge and deal with it. We are now getting back on track." "In the second half, we expect profit to be at least in line with last year. This should give us a springboard into the new financial year and set M&S up for further growth," Machin added.

Impact on clothing and ecommerce operations

The clothing arm, Fashion, Home & Beauty, bore the brunt of the attack, seeing sales decline by a substantial 16.4 percent as the retailer paused online operations and click-and-collect services. Store sales declined 3.4 percent due to reduced availability and fewer visits linked to the lack of click and collect, while online sales declined 42.9 percent.

This sales decline, coupled with higher stock management costs incurred during the manual recovery phase, caused the division's operating profit to fall to 46.1 million pounds (a margin of 2.7 percent, down from 12 percent).

While M&S proactively managed the ordeal—believed to be a ransomware attack—by taking systems offline, the phased restoration meant home delivery resumed in June and click and collect was not fully restored until early August. The company is opening two new full line stores in Bath and Bristol Cabot Circus in the second half and the Fashion, Home & Beauty renewal at Pantheon (Oxford Street) is underway ahead of the expected redevelopment of Marble Arch. Renewals will also open at Brent Cross, Merry Hill and Douglas later this financial year.

Recovery and future outlook

Despite the significant setback, M&S is now focused on regaining momentum. The retailer has begun to restore key elements of its e-commerce platform, recently reintroducing third-party fashion brands like Adidas, Columbia, and New Balance, with more names expected to return soon.

Furthermore, M&S successfully reduced its standard home delivery times to five days in the UK.

Machin acknowledged the "extraordinary" period but affirmed that the underlying business strength and 100 million pounds in insurance income provided resilience.

M&S declared an interim dividend of 1.2 pence. Looking ahead, the company is confident that as the residual effects of the incident diminish, second-half profit will be at least in line with the prior year, setting the stage for future growth.