Marks and Spencer targets profit growth after cyberattack hit annual earnings
Marks and Spencer is forecasting a return to profit growth in the current financial year as it continues rebuilding from a cyber attack that disrupted its online business. The UK retailer narrows full-year losses with a rebound in second-half profits, while food sales and a higher dividend help offset a decline in adjusted pre-tax profit.
Highlights
- Marks and Spencer's adjusted pre-tax profit for the year to March drops 23.8 per cent to £671.4 million after nearly £300 million in charges, including £131 million tied to last year's cyberattack.
- Group sales increase 24.8 per cent to £17.3 billion, food revenue rises 7 per cent, and the full-year dividend grows 16.7 per cent to 4.2p, with a forecasted return to profit growth this year.
- Marks and Spencer aims to double annual online non-food sales to nearly £3 billion and will invest £650 million to £750 million in 2024, focusing two-thirds on food store development.
Annual results and recovery plan
As reported by Financial Times, Marks and Spencer says adjusted pre-tax profit for the year to March falls 23.8 per cent to £671.4 million, after nearly £300 million in charges including £131 million linked to the cyber attack.Group sales rise 24.8 per cent to £17.3 billion, supported by a 7 per cent annual increase in food revenue. The retailer also raises its full-year dividend by 16.7 per cent to 4.2p, while saying it expects to return to profit growth in this financial year.
The customer data theft in April last year wipes more than £750 million from the company's market capitalisation, and Marks and Spencer forecasts the incident will cost up to £300 million in operating profit this year.
UK market share and investment focus
Under chief executive Stuart Machin, the company is seeking to regain ground in the UK fashion market by aiming to double annual online non-food sales to nearly £3 billion in the medium term. It also wants online sales to account for about half of total fashion sales.Marks and Spencer is also continuing its longer-term shift toward grocery while reducing its number of full department stores. According to data company NiQ, the retailer exceeds 4 per cent of the UK grocery market for the first time last year, and it plans to invest £650 million to £750 million this year in store development, with about two-thirds of that total directed to food.
Our earlier article on the UK Treasury’s proposed voluntary caps on essential grocery prices outlined talks with major supermarket groups to limit prices on staples such as bread, milk and eggs, potentially in exchange for easing certain packaging rules and delaying healthy-food regulation changes. We also noted strong resistance from retailers and the wider sector, which argued that rising regulatory and tax costs—rather than pricing policy—were key drivers of food inflation and could ripple through the supply chain.
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