Marks & Spencer (M&S) faces a significant challenge as it prepares to unveil its annual financial performance, following a cyber attack last month that has disrupted operations and potentially cost the retailer millions in lost revenue. The incident, attributed to the hacking group Scattered Spider, has placed immense pressure on the company, which has been forced to suspend all online orders for nearly three weeks. Financial analysts estimated that the breach could be costing M&S around £4 million a day in lost sales, particularly detrimental as the disruptions coincide with a critical period for spring and summer clothing sales.
Despite the turmoil, M&S reported that its physical stores remained operational, although in-store availability was briefly impacted due to changes in IT systems. Recent updates indicate a swift improvement in food supply availability, with distributions returning to normal levels. However, the broader implications of the cyber attack are significant. Customer data, including names, email addresses, and dates of birth, was compromised, sparking concerns about security and consumer trust.
When M&S announces its annual results, investors will be keen to assess the full extent of the damage and the company’s plans for recovery. The retailer has not disclosed a precise financial cost of the breach but has reportedly missed out on tens of millions in sales. Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted that while the annual numbers may not fully reflect the impact of the operational outages—since they occurred later in the financial year—guidance for the upcoming year is anticipated to be cautious.
Analysts from Barclays have projected a staggering £200 million impact on profits for the 2025/26 financial year, though much of this may be offset by a claim of up to £100 million from the company’s cyber insurance policy. Insurers, including Allianz and Beazley, are expected to cover substantial portions of the damages, although it is worth noting that M&S's insurance premium—currently under £5 million—could potentially double unless the retailer enhances its cyber risk management practices.
The immediate implications extend beyond financial loss; the incident has triggered a turbulent period for M&S, leading to a 16% decline in its share price, erasing approximately £1.3 billion of the company's market value. This has occurred following a period of relative stability and growth under the leadership of CEO Stuart Machin, who only last month saw shares reach nearly a nine-year high.
The ramifications of this attack echo throughout the retail sector, which has witnessed a surge in cyber threats. Google recently highlighted the aggressive tactics of Scattered Spider, suggesting that retailers in both the UK and the US may become increasingly vulnerable as this hacking group seeks new targets. The vulnerability of the retail industry, coupled with high volumes of consumer data, has raised alarms about future cyberattacks and the need for fortified security measures across the board.
In light of this incident, the broader trend of rising cyber insurance premiums is expected to escalate. Following the recent string of high-profile attacks—including incidents at retailers like Harrods and the Co-op—experts anticipate that insurers will reassess risk in the sector. This shift may compel businesses to expedite the acquisition of cyber insurance are looking to safeguard their operations and customer trust.
As M&S grapples with the fallout from this cyberattack, the retailer's recovery strategy and future digital resilience will be closely scrutinised by stakeholders keen on understanding the implications for the company's long-term viability in an increasingly digital world.
Reference Map
- Lead article on M&S's financial performance and the impact of the cyber attack.
- Details on the insurance claims potential after the cyber breach.
- Confirmation of the nature of the attack and its effects on sales.
- Information regarding the hacking group's ongoing activities and threats to US retailers.
- Updates on food supply recovery following the cyber incident.
- Discussion on increased premiums and cybersecurity scrutiny in the retail sector.
- Insights on the possibility of lost sales quantified against M&S's past performances.
Source: Noah Wire Services