M&S warns of £300m hacking crisis hit – and disruption could last months
Marks and Spencer (M&S) has warned investors it is facing a £300m hit to trading profits as a result of last month’s ransomware attack.
The company said it was aiming to reduce the figure significantly through management of some costs, including the prospect of insurance payouts, but added disruption to its operations could last into July.
The continuing fallout from last month’s cyberattack is hanging over the retailer’s outlook as its online channels remain down for payments.
Website sales are expected to resume, at least partially, in a couple of weeks’ time.
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M&S said it could not comment on whether it had paid a ransom to the hackers.
Chief executive Stuart Machin, who blamed “human error” for the attack, told an analysts’ call the company was “on the road to recovery” and “getting back to business”.
It is widely believed the group fell victim to the same hackers, known as Scattered Spider, who were linked to similar attacks on the Co-op and Harrods towards the end of April.
Both M&S and the Co-op have admitted personal customer data was snatched, but say the thefts were limited to names and contact details, with payment details safe.
The Co-op said last week it was aiming to improve grocery availability in its stores but progress is believed to have been limited so far, with some empty shelves still being reported.
M&S has seen more than one billion pounds lost from its stock market value since it declared the incident on 22 April.
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Who is behind M&S cyberattack?
The company said of its predicament: “Over the last few weeks, we have been managing a highly sophisticated cyber incident. As a team, we have worked around the clock with suppliers and partners to contain the incident and stabilise operations, taking proactive measures to minimise the disruption for customers.
“We are seeking to make the most of the opportunity to accelerate the pace of improvement of our technology transformation and have 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.
“Since the incident, Food sales have been impacted by reduced availability, although this is already improving. We have also incurred additional waste and logistics costs, due to the need to operate manual processes, impacting profit in the first quarter.
“In Fashion, Home & Beauty, online sales and trading profit have been heavily impacted by the necessary decision to pause online shopping, however stores have remained resilient.
“We expect online disruption to continue throughout June and into July as we restart, then ramp up operations. This will also mean increased stock management costs in the second quarter.”
The statement added the anticipated hit to operating profits this year will be around £300m for 2025/26, which will be reduced through management of costs, insurance and other trading actions. It is expected that costs directly relating to the incident will be presented separately as an adjusting item.
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Mr Machin thanked customers for being “unwavering in their support” for the chain.
“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,” he said.
M&S gave the update while revealing financial results for the year to 29 March.
They showed trading profits at a 15-year high. M&S reported a 22.2% rise to £875.5m, with sales up across each of its product divisions.
Shareholders were rewarded with a 20% increase in the final dividend.
However, that failed to placate investors as the share price fell by almost 3.5% at the market open on Wednesday.
Dan Coatsworth, investment analyst at AJ Bell, said of the update: “Marks & 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.
“The fact online operations might not be back to full power until later in the summer means the company still cannot achieve full earnings potential for some time to come. Marks & Spencer will be able to lower the total hit to profit once it claims on insurance, among other factors, but the cyber-attack has still knocked the business for six.
“There’s still a big unknown regarding any potential fines on Marks & Spencer from the Information Commissioner’s Office (ICO), which enforces data protection regulation.
“There are plenty of examples of companies that have been fined by the ICO for not taking appropriate steps to prevent data breaches. The maximum fine by the ICO is £17.5m or 4% of global annual turnover, whichever is higher. Marks & Spencer has just reported £13.8bn revenue, so 4% of that figure is £552m.
“That’s in a worst-case scenario, and any fine would account for many different factors. We’re unlikely to find out in the near term if there will be a fine as there will be investigations galore into exactly what’s happened and into the retailer’s overall data protection capabilities.”
Friends of Jay Slater have failed to appear as witnesses at an inquest into his death – as a coroner heard the British teenager had drugs in his system before he died from a “devastating” head injury.
Jay Slater, 19, from Oswaldtwistle in Lancashire, disappeared in Tenerife after attending a music festival in June last year.
In the early hours of the following day, he is believed to have travelled to an apartment where people he had met were staying – before he went missing.
His body was recovered in a remote part of La Masca village on 15 July following an extensive search of the island by authorities and his family.
The valley where Mr Slater’s body was found in Tenerife
His mother Debbie Duncan, stepfather and other family members attended the inquest into Mr Slater’s death at Preston Coroner’s Court on Wednesday.
Ms Duncan broke down in tears as she told the hearing she still had questions that needed answers.
The hearing, scheduled to last one day, was told extensive efforts had been made to reach several witnesses who were in contact with Mr Slater before he disappeared, which included summonses being issued.
However, a number of witnesses had failed to respond, including Mr Slater’s friends Bradley Geoghegan, Brandon Hodgson and Lucy Law, who were out with him at the music festival.
Jay Slater disappeared in Tenerife in June last year before his body was found the following month. Pic: LBT Global/Slater family
The two men who were staying at an Airbnb that Mr Slater went back to before he disappeared have also not been traced.
Ms Duncan said: “How can we ever get any understanding?
“There’s things we want to question. We want these people to be sat in front of us, because our son went on holiday and didn’t come back, so there’s questions we need to ask.”
Coroner Dr James Adeley agreed to adjourn the hearing, at the request of Mr Slater’s tearful mother, who asked for the witnesses to be brought to court to give evidence before the inquest concludes. A further hearing date has yet to be set.
Earlier, the court heard analysis of Mr Slater’s body showed traces of drugs including cocaine, ketamine and ecstasy.
During Wednesday’s hearing, Home Office pathologist Dr Richard Shepherd detailed Mr Slater’s injuries.
Mr Slater died from a ‘devastating’ head injury, a coroner heard. Pic: PH Build Group
He described “extensive fractures of the left side of his head… extending into the bottom of his skull”.
Mr Slater also sustained “fractures to the left side of the pelvis and hip joints”.
Dr Shepherd said the injuries were “entirely consistent with a heavy fall, from a height, landing on his head”.
Asked by the coroner if there was any suggestion of assault or restraint, he replied: “Nothing to suggest an assault, gripping, holding, nothing of that sort.”
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Dr Adeley asked the pathologist about the impact of Mr Slater’s injuries.
Dr Shepherd replied: “It would have had an immediate and devastating effect on Jay’s consciousness.
“The injuries were so severe I have no doubt he would have been instantly unconscious from the moment of that blow to the head. Death could well have been instant, the injury was so severe.”
Failing that, it would have most likely occurred “extremely soon after” the fall, he added.
Dr Shepherd gave an official cause of death as a head injury.
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A registered sex offender was found with a six-year-old girl after he was detected by facial recognition technology.
David Cheneler, 73, was discovered with the child – whose mother was “completely unaware of his offending history” – after he was identified by a police van in Camberwell, south London, in January.
He was spotted using advanced technology known as Live Facial Recognition (LFR), where live footage is recorded of members of the public as they walk past, capturing their faces, which are then compared against a database of wanted offenders.
If a match is determined, the system creates an alert, which is assessed by an officer.
If suspicions are aroused, the police officer may decide to speak with the individual in question.
The 73-year-old was detected in Camberwell, south London. Pic: Metropolitan Police
When Cheneler was detected on 10 January, cameras alerted the authorities to his status as a registered sex offender.
Additional checks confirmed he had breached his Sexual Offences Prevention Order (SOPO), which prohibited him from being alone with children under 14.
Cheneler was also in possession of a lock knife hidden in the buckle of his belt.
He was subsequently arrested and taken into custody.
Cheneler’s arrest was captured on police bodycam footage. Pic: Metropolitan Police.
Lindsey Chiswick, the Metropolitan Police‘s lead for LFR, said it was “a prime example of the variety of uses” of the technology.
“The tool is not only used to find those wanted, but also to stop people on a watch list who have conditions they must adhere to,” she added.
“These interventions are crucial. Without this technology, Cheneler may have had the opportunity to cause further harm.”
Cheneler had picked up the child from school as a favour to her mother, which he had done twice previously, according to the Met Police.
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Detective Constable Adam Pearce said: “Although there were no allegations made towards David Cheneler on this occasion, it’s possible if he hadn’t been identified using this technology, he could have gone on to abuse this child.
“Her mother was completely unaware of his offending history, and along with her young daughter, were both taken advantage of by Cheneler who abused their trust.”
Cheneler was sentenced to two years’ imprisonment at Kingston Crown Court on Tuesday.
In January, he pleaded guilty at Wimbledon Magistrates’ Court to breaching the conditions of his SOPO, and to possessing an offensive weapon.
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