The focus when Marks & Spencer (MKS) posts its full-year results may be less about the numbers themselves and more about the company quantifying the impact of a crippling cyber attack.
Over the last few years, Marks has made real progress in rejuvenating its brand, broadening the appeal of its already successful food arm with more affordable ranges and bringing its laggard clothing division up to speed. This had helped the shares advance more than 300% from its September 2022 lows.
In its third-quarter update in January, the FTSE 100 retailer reported an 8.7% increase in total food sales, reaching nearly £2.6 billion for the 13 weeks ending 28 December 2024. Like-for-like food sales rose by 8.9%, driven by strong demand for premium food during Christmas and a 14% boost in the 'Remarksable' value range.
While it won’t undo all of this progress, the recent crisis has significantly impacted operations nonetheless. Initially reported over the Easter weekend, the cybersecurity breach has seen customers unable to place online orders, the company's hiring programme halted and empty shelves appearing nationwide due to affected logistics systems.
Although contactless payments were promptly restored, the protracted nature of the incident will be causing genuine concern.
Analysts at Deutsche Bank estimate the attack could be costing the company £15 million in lost profits every week.
The continuing impact on the share price may depend on the extent to which it leaves any lasting brand damage, so as well as an update on cyber issues investors will be keeping tabs on the tone adopted by the company in its outlook statement.
The revelation on 13 May that customer data had been compromised, although thankfully not bank details, will not help from a brand integrity perspective.
In January, alongside the resilient third-quarter numbers, Marks flagged an ‘uncertain’ outlook and the impact of changes in last year’s Budget to employers’ national insurance contributions and the national living wage. The international arm also experience soft trading in the third quarter and growth in non-food sales was relatively sluggish.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
magazine
