Marks and Spencer forecasts return to profit growth after cyberattack hit annual earnings

 

LONDON, May 20 — British clothes-to-food retailer Marks and Spencer forecast Wednesday a return to profit growth as it recovers from a cyberattack that disrupted its online services last year, hitting annual earnings.

Profit after tax for the year to March fell 12.3 percent to £259 million ($347 million) compared with a year earlier, the company said.

The retailer added that it expected to return to profit growth in the current financial year.

Marks was hit by costs of £131 million related to the cyberattack, which crippled its online sales for about six weeks last year and resulted in some customer data being stolen.

“We were laser focused on our customers, worked incredibly hard to recover our business, and we came out stronger,” chief executive Stuart Machin said in a statement.

Despite optimism for the year ahead, Machin said retailers were facing “a triple whammy of headwinds” from increased taxation, more regulation and higher costs linked to the Middle East war.

The company pointed in particular to higher fuel, freight and input costs.

It described the period as a “year of two halves: significant operational impact from the cyber incident during the first, followed by a return to sales and profit growth in the second”.

The breach forced the retailer to suspend online sales, contactless payments at stores and even recruiting operations.

Sales in its fashion, home and beauty division fell 7.7 percent in its last fiscal year, while food sales rose seven percent.

“The crisis now looks more like a blip in a story of continuing recovery at Marks,” said AJ Bell investment director Russ Mould.

“An increase in the dividend and confidence in a return to growth in the current financial year has won investors over,” he added.

Marks and Spencer shares rose four percent on the London stock exchange, where the top-tier FTSE 100 index was trading. — AFP