Marks & Spencer Cyber Attack Likely Cost Retailer Millions Daily

Markets are bracing themselves for a significant blow to Marks & Spencer's financial performance as the retailer prepares to reveal its annual results next Wednesday. A recent cyber attack, attributed to the hacking group Scattered Spider, is believed to have cost M&S tens of millions of pounds in lost sales, with one expert estimating daily losses at £4 million.

The incident, which occurred almost a month ago, has had a lasting impact on the retail giant, forcing M&S to halt all online orders and affect payments and click-and-collect services for three weeks. While the company's in-store availability was temporarily impacted due to changes in its IT systems, a recent update indicated a swift recovery on this front.

However, the data breach remains a serious concern, with hackers successfully accessing customer personal data, potentially including names, email addresses, postal addresses, and dates of birth. Investors will be keen to understand the full extent of the damage and the measures M&S is taking to address the situation when the company releases its financial results on May 21st.

The retailer has not yet divulged the financial cost of the incident, but analysts have predicted that shareholders will be eagerly awaiting the firm’s guidance on profits and revenues for the current year as a result. Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Although the annual numbers won’t show the effect, as they end before the outages of operations occurred, some guidance for the year ahead is expected, and it’s likely to be very cautious indeed.”

She added that fashion sales could be a particular casualty, with the disruption coming amid a spell of warm weather during a key period for spring/summer clothing lines. Analysts at Barclays have suggested the cyber attack could result in a £200 million cost for the 2025/26 financial year but that this is likely to be offset by an insurance payout of around £100 million.

M&S is expected to report that total group sales increased by around 5% to £13.8 billion for the year to March 31, according to sector analysts. The company is also expected to reveal pre-tax profit of around £840 million for the year, compared with around £716 million a year earlier.

The cyber attack comes at a challenging time for M&S, which has been on a positive trajectory under the leadership of Stuart Machin. Shares struck an almost nine-year-high last month before a recent drop in value. Investors will be watching closely to see how the company responds to the breach and whether it can restore its growth momentum.

As markets await the release of M&S' annual results, one thing is clear: the cyber attack has dealt a significant blow to the retailer's financial performance. With shares expected to be cautious ahead of the announcement, investors will be hoping for reassurance from the company that it can navigate this challenge and emerge stronger on the other side.