Marks and Spencer Cyberattack Impacts H1 Profits

Marks and Spencer (MKS.L) reported interim results for the 26 weeks ended September 27, 2025, revealing a profit hit due to a cyber incident, but highlighting signs of regaining momentum.

M&S Group adjusted profit before tax (PBT) fell to £184.1m, a significant drop from £413.1m in the prior year, primarily due to the one-off impact of the cyber incident.

While insurance income of £100.0m partially offset the losses, adjusting items totaled £167.8m, including £101.6m directly related to the incident.

Revenue increased to £7,942.3m from £6,481.0m, a rise of 22.5%, indicating underlying sales growth despite the profit headwinds. The company's statutory profit before tax took a major hit, coming in at £3.4m compared to £391.9m the previous year. Basic earnings per share also plummeted to 0.3p from 14.0p.

Despite the profit slump, the company increased its interim dividend to 1.2p per share, up from 1.0p, signaling confidence in its financial position.

The retailer maintains a strong balance sheet with net funds excluding lease liabilities of £176.1m and cash and liquidity exceeding £1.6bn. This move signals a commitment to returning value to shareholders.

Driver Breakdown:

• Food Performance: Food sales increased by 7.8%, driven by a focus on quality, innovation, and value ranges.
• Fashion, Home & Beauty Recovery: While slower than Food, the recovery in Fashion, Home & Beauty is underway, with improved style perceptions.
• Strategic Investments: Investments in new stores (15 opened in H1, 20+ planned for H2) and technology aim to reshape M&S for future growth.

AskTraders Takeaway:
The cyberattack's impact is substantial, but the underlying business shows resilience. The increased dividend and focus on cost reduction could reassure markets, but the recovery's pace in Fashion, Home & Beauty will be closely watched.

CEO Stuart Machin stated, “The first half of this year was an extraordinary moment in time for M&S… We are now getting back on track… In the second half, we expect profit to be at least in line with last year. This should give us a springboard into the new financial year and set M&S up for further growth.”

The company is accelerating its cost reduction program, targeting £600m in savings to mitigate inflation and regulatory cost increases. M&S is also investing £340m in its Food supply chain to secure capacity for future expansion.