Cyber attack on M&S involved ‘sophisticated impersonation’, chairman says
The chairman of Marks & Spencer has told MPs the company is “still in the rebuild mode” and will be for “some time to come” following a cyber attack which led to empty shelves and limited online operations for months.
Speaking publicly for the first time since the attack, Archie Norman declined to answer whether the business had paid a ransom.
“It’s a business decision, it’s a principal decision,” he told members of the Business and Trade Committee (BTC).
“The question you have to ask is – and I think all businesses should ask – is, when they look at the demand, what are they getting for it?
“Because once your systems are compromised and you’re going to have to rebuild anyway, maybe they’ve got exfiltrated data that you don’t want to publish. Maybe there’s something there, but in our case, substantially the damage had been done.”
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When asked again later in the BTC evidence session, Mr Norman said, “We’re not discussing any of the details of our interaction with the threat actor, including this subject, but that subject is fully shared with the NCA [National Crime Agency].”
“We don’t think it’s in the public interest to go into that subject on it, because it is a matter of law enforcement”, he added.
What happened?
The initial entry into M&S’s systems took place on 17 April through “sophisticated impersonation” that involved a third party, Mr Norman said.
It was two days later, on Easter Saturday, before the company became aware of the attack, and approximately a week after the intrusion, before the retailer heard directly from the attacker.
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Who is behind M&S cyberattack?
A day later, after learning of the attack, the authorities were notified, while customers were told on Tuesday, MPs heard.
As well as British authorities, the US FBI was contacted, who are “more muscled up in this zone” and were “very supportive”, Mr Norman said.
By the time the breach is clear, systems have already been compromised, the chairman said.
The group behind the attack may have been Scattered Spider, some of whom are believed to be English-speaking teenagers, but Mr Norman said M&S made an early decision that no one from the company would deal directly with the so-called “threat actor”.
“Anybody who’s suffered an event like ours, it would be foolish to say there’s not a thousand things you’d like to have done differently,” he added.
Advice for businesses
In a warning to other businesses, M&S’s general counsel and company secretary Nick Folland said firms should be prepared to operate without IT systems.
“One of the things that we would say to others is make sure you can run your business on pen and paper,” he said.
Awareness and planning for the threats of cybersecurity meant M&S had trebled the number of people working on cybersecurity to 80and doubled its expenditure.
“We curiously doubled our insurance cover last year”, Mr Norman added.
In a good position
The business was better positioned to deal with the strike than at the start of Mr Norman’s tenure, he said.
“The context of M&S is when I joined the business, it was a very broken business… our systems were in a pretty decrepit state.”
“So I have to say if this has happened then I think we would have been kippered.”
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Recent profits meant the company was “muscled up”.
“Extensive” insurance cover means M&S expects to make an “unsurprisingly significant claim” and receive “substantial recovery”, though the process of finding out how much will take about 18 months.
The £300m sum M&S said it expected to lose as a result of the cyber attack does not include money it expects to claim via insurance. The financial hit was calculated at £300m as the chain department store was losing £10m a week by not operating online.
The incident has “not really” affected its future, Mr Norman said.
The world’s most valuable company, and first to be valued at $4trn (£2.9trn), beat market expectations in keenly anticipated financial results.
Microchip maker Nvidia recorded revenues of $46.7bn (£34.6bn) in just three months up to July, latest financial data from the company showed, slightly better than Wall Street observers had expected.
The company’s performance is seen as a bellwether for artificial intelligence (AI) demand, with investors paying close attention to see whether the hype is overblown or if significant investment will pay off.
Originally a creator of gaming graphics hardware, Nvidia’s chips help power AI capability – and the UK’s most powerful supercomputer.
Nvidia’s graphics processors underpin products such as ChatGPT from OpenAI and Gemini from Google.
Other tech giants – Microsoft, Meta and Amazon – make up Nvidia’s biggest customers and are paying large sums to embed AI into their products.
Why does it matter?
Nvidia has been central to the boom in AI development and the surge in tech stock valuations, which has seen stock markets reach record highs.
It represents about 8% of the value of the US S&P 500 stock market index of companies relied on to be stable and profitable.
Strong results will continue to fuel record highs in the market. Conversely, results that fail to live up to the hype could trigger a market tumble.
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Nvidia itself saw its share price rise more than 40% over the past year. Its value impacts anyone with cash in the US stock market, such as pension funds.
The S&P 500 rose 14% over the past year, and the tech-company-heavy NASDAQ gained 21%, largely thanks to Nvidia.
As such, its earnings can move markets as much as major economic or monetary policy announcements, like an interest rate decision.
Sir Keir Starmer with NVIDIA chief Huang at London Tech Week. Pic: AP
What next?
Revenue rises are forecast to continue to rise as Nvidia said it expected a rise to roughly $54bn (£40bn) in the next three months, more than the $53.14bn (£39.3bn) anticipated by analysts.
This excludes any potential shipments to China as export of Nvidia’s H20 chip, designed with the Biden administration’s export crackdown on advanced AI powering chips in mind, had been banned under US national security grounds.
But in recent weeks, Nvidia and another chipmaker, AMD, reached an unprecedented agreement to pay the Trump administration a 15% portion of China sales in return for export licences to send chips to China.
There were no H20 sales at all to China in the second quarter of the year, the period for which results were released on Wednesday evening.
Previously, 13% of Nvidia’s revenue came from China, with nearly 50% coming from the US.
Market reaction
Despite the expectation-beating results, Nvidia shares were down in after-hours trading, as the massive revenue rises previously booked by the company were not repeated in the latest quarter.
Compared to a year ago, revenues rose 56% and 6% compared to the three months up to April.
The absence of Chinese sales in forecasts appeared to disappoint.
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