Britain's Marks & Spencer Says Cyberattack to Cost $400 Million
LONDON: British retailer Marks & Spencer (M&S) announced a devastating cyberattack that is expected to cost it around £300 million ($403 million) in operating profit, with the disruption set to run into July. The attack on one of the biggest names in Britain, with 64,000 staff and 565 stores, sent shockwaves through the retail sector.
The news comes as a major blow to M&S, which was trading strongly before the hack, forcing its online clothing operation offline, leaving some food shelves bare, and wiping over a billion pounds from the company's stock market value. The cyberattack also forced the company to return to pen and paper systems in its food division, resulting in reduced availability and higher waste and logistics costs.
However, M&S said that online sales and trading profit had been "heavily impacted" by the decision to suspend online shopping, although store sales had "remained resilient". The company also reported a 22.2% rise in adjusted pretax profit to £875.5 million pounds for the year to March 29, ahead of analysts' average forecast of £840 million pounds.
Shares in M&S were down 3.4 per cent in early trade on Wednesday, extending losses since the cyberattack to 13 per cent. The company said it would use the crisis to "accelerate the pace of improvement of our technology transformation" and had found new and innovative ways of working.
"We are focused on recovery, restoring our systems, operations and customer proposition over the rest of the first half, with the aim of exiting this period a much stronger business," said Chief Executive Stuart Machin. "This incident is a bump in the road, and we will come out of this in better shape, and continue our plan to reshape M&S for customers, colleagues and shareholders."
Customers had been "unwavering in their support" during this difficult time, according to Machin. With hackers having also hit the Co-op and Harrods in Britain, and Google saying last week that those responsible were targeting US companies, retailers worldwide are racing to boost defences.
The Impact on M&S
The cyberattack has had a significant impact on M&S, with the company's stock market value taking a hit. The news also overshadowed the progress M&S had made with its turnaround plan, which reported a 22.2% rise in adjusted pretax profit to £875.5 million pounds for the year to March 29.
Sales increased 6.1 per cent to £13.9 billion, with food sales up 8.7 per cent and clothing, home and beauty sales up 3.5 per cent, with the group winning market share in both divisions. However, some rivals are likely to benefit from M&S' online problems.
The Global Cyber Landscape
British companies and institutions have been hit by increasingly aggressive and regular cyber and ransomware attacks in recent years, with the British Library, a blood testing service, and the London Underground all suffering months of disruption.
Chief Executive Stuart Machin acknowledged that M&S had overcome many challenges in the last 140 years and would do so again. "This incident is a bump in the road, and we will come out of this in better shape, and continue our plan to reshape M&S for customers, colleagues and shareholders."
Customers had been "unwavering in their support" during this difficult time, according to Machin. With hackers having also hit the Co-op and Harrods in Britain, and Google saying last week that those responsible were targeting US companies, retailers worldwide are racing to boost defences.