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.
A larger than expected hike in the energy price cap from October is largely down to higher costs being imposed by the government.
The typical sum households face paying for gas and electricity when using direct debit is to rise by 2% – or £2.93 per month – to £1,755, the energy watchdog Ofgem announced.
The current price cap is £1,720 a year. A 1% increase had been widely forecast.
The latest bill settlement, covering the final quarter of the year until the next price review takes effect from January, will affect around 20 million households.
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There are 14 million others, such as those on pre-payment meters, who will also see bills rise by a similar level.
Those on fixed deals, which are immune from price cap shifts until such time as the term ends, currently stands at 20 million.
Wholesale prices – volatile since Russia’s invasion of Ukraine back in February 2022 – have been the main driver of rising bills.
But they are making little contribution to the looming increase.
Ofgem explained that government measures, such as the expansion of the warm home discount announced in June, were mainly responsible.
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Bills must rise to pay for energy transition
The discount is set to add £15 to the average annual bill.
It will provide £150 in support to 2.7 million extra people this year, bringing the total number of beneficiaries to six million.
The balance is made up from money needed to upgrade the power network.
Tim Jarvis, director general of markets at Ofgem, said: “While there is still more to do, we are seeing signs of a healthier market. There are more people on fixed tariffs saving themselves money, switching is rising as options for consumers increase, and we’ve seen increases in customer satisfaction, alongside a reduction in complaints.
“While today’s change is below inflation, we know customers might not be feeling it in their pockets. There are things you can do though – consider a fixed tariff as this could save more than £200 against the new cap. Paying by direct debit or smart pay as you go could also save you money.
“In the longer term, we will continue to see fluctuations in our energy prices until we are insulated from volatile international gas markets. That’s why we continue to work with government and the sector to diversify our energy mix to reduce the reliance on markets we do not control.”
The looming price cap lift will leave bills around the same sort of level they were in October last year but it will take hold at a time when overall inflation is higher.
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Food price increases, also partly blamed on government measures such as the national insurance contributions hike imposed on employers, have led the main consumer prices index to a current level of 3.8%.
It is predicted to rise to at least 4% in the coming months, further squeezing household budgets.
Ministers argue that efforts to make the UK less reliant on natural gas, through investment in renewable power sources, will help bring down bills in future.
Energy minister Michael Shanks said: “We know that any price rise is a concern for families. Wholesale gas prices remain 75% above their levels before Russia invaded Ukraine. That is the fossil fuel penalty being paid by families, businesses and our economy.
“That is why the only answer for Britain is this government’s mission to get us off the rollercoaster of fossil fuel prices and onto clean, homegrown power we control, to bring down bills for good.
“At the same time, we are determined to take urgent action to support vulnerable families this winter. That includes expanding the £150 Warm Home Discount to 2.7 million more households and stepping up our overhaul of the energy system to increase protections for customers.”
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