Marks and Spencer Warns of £300m Profit Hit Due to Hacking Crisis

Marks and Spencer (M&S) has issued an update on the ongoing impact of its recent ransomware attack, warning investors that it faces a significant hit to trading profits. The company's chief executive, Stuart Machin, revealed that the cyberattack is expected to result in a £300m loss to operating profits this year, with the figure likely to be reduced through management of costs and insurance payouts.

M&S had initially reported that the attack had resulted in significant disruptions to its operations, including the temporary closure of its online shopping platform. However, the company has since said that it is working to restore its systems and operations as quickly as possible.

Disruption to Operations Could Last Months

The disruption to M&S's operations could last into July, with the company expecting to take several weeks to ramp up its online shopping platform. This will also mean increased stock management costs in the second quarter, according to the company's statement.

Investors React to the Update

Investors have reacted cautiously to the news, with the share price falling by almost 3.5% at the market open on Wednesday. Dan Coatsworth, investment analyst at AJ Bell, said: "Marks and Spencer has lost a significant number of sales after temporarily halting online orders. Disruption to supplies meant gaps on the shelves and more lost sales in-store. It has also incurred extra waste and logistics costs, all having a negative impact on profit."

Co-op and Harrods Also Affected

M&S is not alone in being affected by the cyberattack. The Co-op and Harrods have both reported similar incidents, with personal customer data stolen from their systems.

Investigations Ongoing

There are ongoing investigations into the source of the ransomware attack, which is believed to be the same hackers who targeted the Co-op and Harrods. The Information Commissioner's Office (ICO) is likely to be involved in these investigations, and any fines imposed could have a significant impact on M&S's profits.

Customer Support

M&S has thanked its customers for their "unwavering support" during this time. The company has also offered advice on how customers can protect themselves from similar incidents in the future.

Past Performance and Future Prospects

Despite the current disruption, M&S's financial results show a 22.2% rise to £875.5m in trading profits for the year to March 29. The company has also reported a 20% increase in the final dividend. However, the share price fell by almost 3.5% at the market open on Wednesday, reflecting investors' concerns about the impact of the cyberattack.

What's Next?

The outlook for M&S is uncertain, but the company has a plan to reshape its business and improve customer experience. With ongoing investigations into the cyberattack, it remains to be seen how the final verdict will affect the company's profits.